Market Overview

Why WWE's Focus On Engagement, Cost Cutting During Pandemic Could Pay Off

Share:
Why WWE's Focus On Engagement, Cost Cutting During Pandemic Could Pay Off

World Wrestling Entertainment, Inc. (NYSE: WWE) shares traded up 2.3% on Friday after the company reported better-than-expected second-quarter earnings.

WWE reported adjusted EPS of 52 cents in the quarter, beating analyst estimates of just 15 cents. However, revenue was down 17% to just $223.4 million, missing analyst estimates of $231 million.

The COVID-19 outbreak has devastated WWE’s live events revenue, which was down nearly 98% to just $1 million.

Cost Cutting Pays Off: Morgan Stanley analyst Benjamin Swinburne said WWE’s earnings beat suggests the company’s cost-cutting efforts are helping offset COVID-19 disruptions.

“WWE is successfully managing its expenditures during the pandemic, while benefiting from its predictable, contractually locked in TV rights revenues,” Swinburne wrote.

He said WWE is actually on track to post year-over-year EBITDA growth in 2020. WWE has been producing all of its live TV content from its performance center in Florida, which has allowed the company to meet its content obligations at significantly lower costs.

Focusing On Engagement: Needham analyst Laura Martin said digital video views were up 1% to 9.9 billion and viewing hours were up 15% to 374 million thanks to the lack of live events and shelter-in-place environment. Wrestlemania video views were up 20% from a year ago despite the event being taped in the Performance Center without an audience.

“In addition, WWE launched a free version of the WWE Network which could draw incremental fans into the WWE universe, and ultimately convert them into paid subs,” Martin wrote.

She said the company’s focus on viewer engagement and cost discipline should pay off for investors in the long-term.

Morgan Stanley has an Equal-Weight rating and $52 price target for WWE. Needham has a Buy rating and $50 target.

The stock trades around $46.39 per share.

Related Links:

Here's What Martha Hart Thinks About Vince McMahon And Bret Hart

Vice's Owen Hart Documentary Revisits WWE's Darkest Day

Photo credit: Ed Webster, Flickr

Latest Ratings for WWE

DateFirmActionFromTo
Aug 2020CitigroupMaintainsBuy
Jul 2020Morgan StanleyMaintainsEqual-Weight
Jul 2020RosenblattMaintainsBuy

View More Analyst Ratings for WWE
View the Latest Analyst Ratings

 

Related Articles (WWE)

View Comments and Join the Discussion!

Posted-In: Benjamin Swinburne Laura Martin Morgan StanleyAnalyst Color Earnings News Price Target Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
PRTKHC Wainwright & Co.Maintains19.0
MCRBHC Wainwright & Co.Maintains41.0
EOLSHC Wainwright & Co.Maintains8.0
PRTSSmall Cap Consumer ResearchMaintains16.0
FIXXHC Wainwright & Co.Maintains30.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com