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March 30, 2015

WWE Stock Crashes After Record-Breaking WrestleMania 31


Fans may be happy about World Wrestling Entertainment’s 31st annual WrestleMania blowout, but investors are not.

WWE stock fell more than 14% on Monday morning after Seth Rollins stole the World Heavyweight Championship belt from Brock Lesnar and Roman Reigns. The dive probably has less to do with what happened in the ring, than how many fans were watching–and subscribing to more wrestling.

WWE announced that its “over-the-top” television network has grown to 1.3 million subscribers, up 31% from January 27, when the company passed 1 million for the first time. That’s tremendous growth for a product that costs $9.99 a month. But it clearly wasn’t enough to impress Wall Street.

“We believe that exceeding 1.3 million subscribers reflects the successful execution of our strategy and puts us on the path to transformative growth through WWE Network,” (former billionaire) WWE CEO Vince McMahon said in a statement.

WWE CFO George Barrios admitted that while the company is “pleased with our short-term results” and “confident in the long-term potential,” subscriber count may “exhibit seasonality” in which customers pay for the service in the run up to big events like WrestleMania and drop it during the slower months.

One successful tactic in February was a free promotion that attracted 201,000 trial subscribers to WWE Network. 154,000 (77%) of those converted to paying subscribers in March.

This isn’t the first time a subscriber update at WrestleMania sunk WWE’s stock. One year ago, the stock plunged 19% the day after WWE’s biggest show. WWE kept falling and hit bottom in May, losing 60% of the company’s value in a month and a half. The stock had rebounded 46% since then before Monday.

source: forbes.com

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