Why World Wrestling Entertainment, Inc. Shares Tumbled Today

Is World Wrestling Entertainment's plunge meaningful? Or just another movement?

Apr 7, 2014 at 7:03PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of World Wrestling Entertainment (NYSE:WWE) plunged nearly 15% Monday after the company provided an update on subscriber numbers for its new streaming network.

So what: Specifically, just 42 days after launching the WWE Network in the U.S., World Wrestling Entertainment said it already has 667,287 subscribers, making it "the fastest-growing digital subscription service." For perspective, WWE previously outlined a goal of reaching 1 million subscribers -- or what management called its breakeven point -- by the end of 2014.

The news comes on the heels of WWE's sold-out WrestleMania 30 event, which aired live Sunday on WWE Network as well as on pay-per-view.

For $9.99 per month and a minimum six month-commitment, the WWE Network provides subscribers streaming online access to both live and scheduled WWE programming, including 12 live pay-per-view events and a comprehensive video-on-demand library.

Now what: However, investors remained concerned as some estimates pegged WWE Network's initial rush to drive as many as 800,000 to 1 million early subscribers by the time WrestleMania 30 concluded. What's more, a Barron's piece this weekend called out WWE on worries the attractively priced service might not make up for the company's resulting drop in pay-per-view revenue.

In any case, we should know more about whether that's actually the case when pay-per-view numbers for WrestleMania 30 are released in a few weeks. Until that happens, I think investors would be wise to refrain using this drop as a buying opportunity.

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Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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