Why Shares of World Wrestling Entertainment, Inc. Got Pinned Today

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  ) were crying uncle today after tumbling as much as 48% as investors weren't pleased with a new TV deal and outlook it announced.

So what: The professional wrestling organization said it signed a new deal with NBCUniversal for undisclosed financial terms, but based on analyst estimates, the deal is not worth nearly as much as investors had expected. Benchmark analyst Mike Hickey said revenue would increase just 50% whereas World Wrestling Entertainment had previously said that the value of the contract would double or triple. Investors also seemed worried about the company's outlook for its new WWE network, which it said would require 1.3 million to 1.4 million subscribers to offset the cannibalization of its pay-per-view business. 

Now what: In the outlook, WWE said the subscriber rate "could vary materially based on a variety of factors," and said having 1 million subscribers by the end of this year would lead to a net loss of $45 million to $52 million. While that projection seemed to scare investors away, the company's outlook for 2015 was much more favorable as a subscriber base of 2 million to 2.5 million would drive a net income of $57 million to $105 million. WWE is clearly taking a risk with the move to its own network and Wall Street dislikes uncertainty, but that decision could pay off handsomely in the long run if the network takes off. Given that, today's slide may offer a chance to pick up shares on the cheap before they recover.

More entertaining than WWE: Will this stock be your next multibagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2960976, ~/Articles/ArticleHandler.aspx, 10/23/2014 2:46:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement