The WWE Big Boss just took a huge hit in the fanny pack this week. Financial experts estimate Chairman Vince McMahon's net worth went down by about third, or $350 Million in just one day. That means the stock plunged from around $20 a share to about $11.
The WWE's recent licensing agreement extension with NBC Universal should have been a major victory for the WWE. In the announcement they touted the high value of their year round live broadcasting. Which was true, but McMahon overplayed his hand, inflating the expectations of stockholders (via Business Insider):
"For months, WWE CEO and Chairman Vince McMahon had been telling investors his company would triple its 2012 operating income of $60 million by 2015, in large part because of a fat new TV contract in line with the big increases enjoyed by other sports leagues like Major League Soccer.
"Looking back, the WWE's recent implosion was caused in large part by an embarrassing amount of unsubstantiated hype the company communicated to investors, both about the size of its forthcoming TV deal and the fortunes of its recently launched streaming video network."
Everyone seems to agree that the promises that were made by McMahon were not delivered on, and the WWE Network has not yielded the dividends that were expected (via Sporting News):
"Here's the problem: Analysts expected a bigger contract. While the pact brings a 70 percent increase in rights fees, WWE had put expectations on steroids. Observers excepted [sic] fees would increase two or maybe three times.
"WWE's albatross, it appears, is the WWE Network, an online operation launched in February. That enterprise is expected to cost between $42 million and $52 million this year, according to the Los Angeles Times."
While investors are currently talking about looking for a new shopkeeper, don't count Vince out just yet. The long-term dividends may just bear out and if not, ol' Vince can probably just spin another pretty tale.
What do you think? Should WWE stockholders cut and run or hold out until the big picture unfolds?
Tell us your thoughts.
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