The WWE made a major announcement on Thursday that appears to have cost the organization a ton of money, at least in the short term. The morning after WWE announced a new television deal with NBCUNiversal, WWE stock plummeted nearly 50%.
According to Forbes, investors are extremely disappointed with the new TV deal, which will allow Monday Night Raw to continue airing on USA Network while Friday Night Smackdown airs on NBC-owned Syfy Network. WWE chairman Vince McMahon insists the deal can only mean positive things for the company’s earnings, but Wall Street experts aren’t buying it.
“To all my little Hulkamaniacs, say your prayers, take your vitamins and you will never go wrong,” Benchmark analyst Mike Hickey wrote on Friday morning while downgrading WWE’s rating from a buy to a hold and cutting its target price by nearly $10 per share. “The company’s valuation could take a heavy beating this morning, as the new domestic TV deal with NBCU likely disappointed investors over limited visibility and believability on the ultimate success of the network.”
The plummet of WWE stock has been so rapid in the past 24 hours that Forbes estimates McMahon has lost somewhere in the neighborhood of $344 million. While that number is constantly changing, that type of loss would cost McMahon his billionaire status for the time being.
Another concern for McMahon’s company has been the launch of WWE Network, which Forbes says will have to pick up a total of around $1.3 million global subscribers in order to offset the loss of WWE pay-per-view revenue. Thus far, there have been roughly 670,000 subscribers.
While we’re hardly financial experts, we feel we can safely speculate that McMahon and his people are not going to starve to death. We expect the WWE to bounce back.