Shares of the Vince McMahon-led World Wrestling Entertainment (NYSE: WWE) fell drastically by over 15% Thursday after releasing third-quarter results that lowered the profit outlook and missed forecasts. After ending Wednesday at $66.40, the price of WWE’s shares fell to $56.04 at the close of Thursday’s session, a drop of 15.65%. The stock is 44% lower from the yearly high of $110.10 reached in April.
In the Q3 results, WWE reported revenues of $186.3 million. This was a drop of less than 2% year-on-year. The sports entertainment company reported revenues of $188.4 million in last year’s third quarter.
Net income for the third quarter also fell drastically year-on-year from $33.6 million to $5.8 million. That’s a seismic 82.7% drop. The company attributed this to a fall in excess tax benefits, lower operating performance and costs related to the new WWE headquarters. In March, the sports entertainment firm announced it was shifting its global headquarters to a new office complex. It will still be based in Stamford, Connecticut.
For the full year 2019, WWE revised guidance on operating income before depreciation and amortization (OIBDA) from $200 million to $180 million to $190 million. The sports firm owned largely by the McMahon family attributed the change to a delay encountered in signing new broadcasting rights in the Middle East and North Africa (MENA) region.
WWE’s co-president and director, George Barrios, stated in an earnings call with analysts:
“…we are modifying our full year 2019 guidance to an adjusted OIBDA range of $180 million to $190 million which would still be an all-time record. The change is attributable to the delay in completing a previously contemplated agreement in the MENA region…”
As the online streaming wars heat up, with AT&T being the latest entrant with its HBO Max offering, it was only natural for related concerns to be raised during its earnings call.
Priced at $ 9.99, the WWE Network, the streaming service of the sports entertainment firm is now among a crowded streaming field. Disney+ pricing its service at $6.99 and Apple TV+ at $4.99 represents bargains, relative to the WWE.
Barrios suggested that WWE is unlikely to reduce the fee noting that there’s a fundamental difference between its niche offering and the aforementioned general entertainment services. According to Barrios, WWE Network is ‘really targeted at a relatively small portion of our overall fan base but our most passionate fans’.
Well, those passionate fans fell by 9% to 1.51 million in the third quarter. More pain lies ahead as the same subscribers are expected to fall to 1.43 million in Q4, a 5.3% drop.
This article was edited by Samburaj Das.