Vince McMahon, CEO of WWE, has recently experienced what one could imagine to be his worst nightmare. Forbes reported that in just 24 hours McMahon has lost approximately $350 million of his fortune. The loss comes in the form of dramatically devalued WWE stock, which plummeted $8.66 from $20.13 a share down to $11.27. Blame has been fingered towards two contributing factors. The first is the mediocre launch of WWE’s streaming network with only 700,000 subscribers. WWE management has already announced that they expect to lose between $45 million and $52 million this year. The second reason behind the stock drop is due to the less than stellar TV deal WWE made with NBC. While the $150 million deal is still within the reasonable ballpark for a type of deal such as this, investors had expected the closing figure to double the actual negotiated price.
Intrepid Capital Management was one investor that seemed to see this coming though. Once WWE’s largest outside investor owning a 10% stake in the company, the management group sold all its holdings this past January. There is the belief that WWE’s CEO has been too excited about the live streaming network and investors can sense the uncertainty bubbling under the company’s surface. The WWE has tried to put concerns about revenue to rest by arguing that their operating costs for the year are only about a third of the recent TV deal that they signed. Still many investors do not see the WWE clearing $90 million to $100 million in profit this year.
Don’t feel too bad for McMahon just yet however. At his peak he was worth approximately $1.6 billion, but even after losing over a quarter of a billion dollars he’s still worth about $750 million. Though he has lost his membership to the billionaire club, it is pride more than his bank account. McMahon really has his work cut out though. It will be his job now to convince investors that their money is safe with the WWE. Professional wrestling has been a continuing source of entertainment through the decades and this is more likely than not just a speed bump, albeit a giant and alarming one.
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