World Wrestling Entertainment Inc. (NYSE:WWE) shares flew upward on Thursday’s market after the firm posted earnings well ahead of what Wall Street was looking for. Shares in the firm have been rocky in recent months as some questioned whether its Netflix-style revenue model would work.
At time of writing shares in World Wrestling Entertainment Inc. were up by 19.84 percent to $19.47 per share. The firm showed earnings per share of 7 cents for the three months through June. Wall Street was, by consensus, looking for a loss of 2 cents. Revenue came in at $150.2m, ahead of the $148.7m Wall Street was looking for.
World Wrestling Entertainment streaming starts to work
World Wrestling Entertainment Inc. (NYSE:WWE) shares have traveled the gauntlet over the last two years. When it launched its online streaming platform Wall Street went wild and drove the price of the firm’s shares to more than $30. The firm’s growth in streaming was stymied by its a la carte model.
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There is no contract when you sign up for WWE Network. Because the WWE is event based, like most major sports, there is little reason for users to stick around in the off season. Users can sign up and pay for a single month if they want to see the big events, and simply not pay for the rest of the year.
Vince McMahon, chairman and CEO of the WWE both on and off the stage said, “The performance of WWE Network demonstrates our ability to transform our legacy pay-per-view business into a global subscription business with high growth potential.”
Getting onto the web isn’t the only way in which the WWE is trying to show its modernity in recent weeks.
Hulk Hogan is gone
Hulk Hogan, likely the face of pro wrestling for much of the world, was fired by World Wrestling Entertainment Inc. (NYSE:WWE) after racist recordings were unearthed. The recordings, which Hulk Hogan says were leaked by Gawker in order to strengthen its case in a $100m lawsuit he filed in 2012, contained a lot of objectionable material that the firm found it could not be connected with.
The WWE, in a statement on the incident, said it was “committed to embracing and celebrating individuals from all backgrounds.” Mr. Hogan was a big asset for the World Wrestling Federation, but the firm’s quick embrace of tolerant social values may have done more to market its events to people in the Western world.
Today’s earnings report covers the period before Hulk Hogan was fired and reflects nothing about the way that the WWE handled that situation. Shares in the WWE lost steam heading into earnings on the back of the Hulk Hogan controversy, but have gained back all they lost and more on today’s market.
Eric Katz at Wells Fargo put a $24 price target on World Wrestling Entertainment Inc. heading into earnings. The bull case, according to Mr. Katz, is for shares to hit $37 by this time next year. Mr. Katz reckons the market still isn’t backing the firm to the extent it should because of the crash in value last year.