After Nearly Doubling, Why Is World Wrestling Entertainment Stock Down 30% in 2014?

The wrestling federation's been taken to the mat, but it's not down for the count

Jun 29, 2014 at 11:06AM


World Wrestling Entertainment (NYSE:WWE) is looking pretty shaky this year, almost as though Seth Rollins body slammed its stock into the mat. After a big run-up in 2013 and a strong start to the current year, shares of the wrestling federation fell harder than Big E after going up against Rusev, and the stock is now down more than 60% from its 52-week high. What gives? 

The short answer is the WWE Network, the wrestling league's subscription streaming service that is replacing the current pay-per-view model. For $9.99 per month, subscribers will receive 24/7 programming that includes access to WWE's live programming as well as its extensive video-on-demand library that at launch at the end of February had more than 1,500 hours of video available for viewing.

WWE Chart

WWE data by YCharts.

Basically, if you're already viewing at least two pay-per-view shows now, which can cost about $45 each, it's a no-brainer to sign up for the mandatory six-month commitment period (you can't just test it for a month then quit). Even those who might only watch one pay-per-view show still might consider it since there's a lot more programming that will be available and it represents a big overall pricing discount. The problem for World Wrestling Entertainment is whether it can generate the support necessary to finance the new model.

WWE says it needs anywhere from 1.3 million to 1.4 million subscribers in order to replace profits it will lose by eliminating pay-per-view, and has a goal of 1 million subscribers by the end of 2014. First-quarter results issued on May 1 show the difficulty it's going to have getting there, as it recorded a net loss of $8 million, or $0.11 per share, compared to the $3 million profit, or $0.04 per share, it gained in the year-ago period. Worse, its guidance for the second quarter reflected widening losses, as much as $18 million.

As of April 6, WWE had 667,287 Network subscribers, meaning for its streaming service to hit 1 million it's going to need a 50% surge in viewers. It's doing that by slashing the cost of watching a wrestling program. If someone were to watch all 12 pay-per-view events, they'd pay around $540 total; a full year's Network subscription will run just $120. That's a major hole to plug, so it's clear WWE is hoping the deeply discounted price will make up in volume what it's losing in per-show value.

It's argument is that when you combine subscribers with its already existing pay-per-view members, the 1 million viewer number is doable. Because they get access to live events they would need to otherwise pay for, it becomes a compelling option to WWE fans.

According to Forbes, the WWE has some 97 million "active" fans and there are 50 million U.S. households that have at least one fan. In terms of television viewership, the only sport bigger than wrestling is the NFL, with WWE's programming being the top-rated shows on USA Network and SyFy. The WWE brand is among the top "most talked about" on Facebook and it has over 4.4 million followers on Twitter.

Its social media presence is certainly top-notch, so transforming itself into a digital media powerhouse, as its Network seeks to do, and changing it from a network broadcast sports organization into a Internet-based entity, certainly has potential. Investors, though, remain skeptical about its being able to pull it off. Accustomed as they are to its traditional network TV revenue model, the change is scary.

But at 15 times earnings estimates and less than two times revenues -- and factoring in the incredibly loyal fan base it possesses -- World Wrestling Entertainment's valuation may have been thrown to the mat, but it's not down for the count. Like one of its life-altering story lines, investors ought to expect a dramatic comeback with a chest-thumping performance at the end.

Leaked: This coming consumer device can change everything
Imagine the multibillion-dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the-radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers