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

Is WWE's stock move meaningful or just another movement?

May 16, 2014 at 2:12PM

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.

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Jeremy Bowman has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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