World Wide Wrestling On The Ropes After NBC Deal, Guidance Disappoint

Talk about a Smackdown.

Shares of World Wrestling Entertainment, $WWE, fell more than 42% after the company announced a deal with Comcast-owned NBCUniversal, $CMCSA, that indicated NBC had WWE on the ropes.

$WWE clotheslined, body-slammed, and flying slingshot splashed

— Jean D’Eau (@CassandraTwit) May. 16 at 09:24 AM

The sports entertainment company reached a deal with NBC to continue to air Monday Night Raw and Friday Night Smackdown, its flagship shows, on NBC’s USA and SyFy networks, respectively. However, analysts estimated that WWE management had negotiated a much smaller rate increase than the anticipated 2X to 3X hike.

In a Friday note to investors, Benchmark analyst Mike Hickey estimated that management had gotten, at best, a 50% increase from prior rates. He downgraded the stock from a buy to a hold.

$WWE Seems like the bulls are looking for a rate increase on this new NBC deal, but rumors coming out now saying no change to current rate

— Open Outcrier (@openoutcrier) May. 14 at 03:47 PM

In a separate statement, released Thursday, World Wrestling Entertainment management guided for a net loss in 2014 of between $45 million and $52 million. The company said that subscribers to its online television service, the WWE Network, would have to grow at a “steady state” of between 1.3 million and 1.4 million to offset the cannibalization of WWE’s Pay-Per-View business.

$WWE stock got bodyslammed this morning. TV Newtork biz wont make money until 2015! Down 50% pre market

— Paul Ciana (@paulciana) May. 16 at 09:16 AM


$WWE yeah, over 4 million shares smacked-down pre-mkt

— Panther Creek (@rahagar) May. 16 at 09:14 AM

Some traders argued that the selloff was overdone. The company has an $866 million market cap and trades at 9.75X expected 2015 earnings. Sentiment on the stock remained majority bullish with 52% of the crowd calling for gains, according to StockTwits’ analytics.

$WWE now its so cheap at 700M anyone can take over the assets, virtually no debt ! WHY WOULD ANYONE SELL IT HERE ?

— Rodney Munos (@liborprivate) May. 16 at 10:11 AM

Management still believes it could double or triple operating income to as much as $195 million by 2015. Management said that “favorable” contract renegotiations and its online subscription site would help increase revenue by $90 million to $200 million.Screen Shot 2014-05-16 at 11.16.14 AM

But other investors said there was more pain ahead for World Wrestling Entertainment. And they argued that the stock wouldn’t regain positive momentum until it could prove real traction in its online subscription network.

$WWE This was always a huge gamble. Network numbers were the setup, this is the finisher. Longs are hurting. Glad I got out at $26.

— Thomas Marullo (@tmar89) May. 16 at 10:09 AM


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