What happened?
Choke slams and power bombs are now part of a key S&P index. S&P Dow Jones Indices announced that "sports entertainment" king World Wrestling Entertainment (WWE) will be included on the company's S&P SmallCap 600 index, under the "movies and entertainment" sub-industry, effective after the close of trading on Wednesday, Jan. 20.
The company takes the place of current index component Wasau Paper (NYSE: WPP), which is in the process of being acquired by Sweden's SCP in a deal worth $513 million. It is expected that the Wasau Paper acquisition will be finalized on or about that date. S&P's move is one of several recent adjustments to its various indexes announced recently.
Does it matter?
The fundamental investment thesis on World Wrestling Entertainment doesn't change with this piece of news, although investors should consider it a positive development. That's because it'll instantly make the stock a candidate for one of the many exchange-traded funds that specialize in small-cap issues; the higher interest from those entities should help support the share price. As for Wasau Paper, there shouldn't be any negative effect, as a value for the stock has been set with the buyout deal.
The times have been good for World Wrestling Entertainment lately. Take-up of its all-wrestling, all the time WWE Network has snowballed, a key reason why the company's stock price gained over 40% during the course of 2015. The company faces challenges going forward, though, with a depleted talent lineup (due to injuries) going into its signature Wrestlemania event, and TV ratings that have been relatively light in recent weeks. Still, it's a unique stock backing a company on the rise, and its muscling onto the S&P SmallCap 600 is a nice little win.
