(Bloomberg) — Continued hardships for World Wrestling Entertainment Corp. pushed shares to the lowest since May 2018 as the company’s financial outlook underscored the struggle it faces to re-energize fans.
Investors had already been bracing for a disappointment after WWE warned that 2019 earnings were lower than previously forecast, spurring a management reshuffle. Thursday’s plunge came after the company forecast first-quarter operating income between $60 million and $65 million, trailing Wall Street’s estimate of $67.5 million
WWE’s outlook came with the caveat that it’s “subject to considerable uncertainty,” an indication that efforts to improve fan enthusiasm and increase the money generated from its content remain in limbo. Management is pursuing strategic alternatives for its WWE Network streaming service as well as distribution agreements in the Middle East and India, said interim Chief Financial Officer Frank Riddick.
Thursday’s drop pushed the decline since the Jan. 30 earnings warning to 31%.
“While we expect 2020 will ultimately come in above the guidance range assuming a successful TV deal renewal in India, this is nonetheless a negative surprise,” John Belton, an analyst at Evercore, wrote in a note calling the company’s forecast a “stone cold stunner.” What plans are being considered for the WWE Network will get full focus on the company’s earnings call, he added.
Read more: McMahon Forces WWE Executives to Tap Out After Earnings Slip
Vince McMahon, the pro-wrestling giant’s chief executive officer, fired two of his top executives a week ago as earnings were dimmed by lower live event ticket sales and a decline in streaming subscriptions. The absence of a wrestling video series on Facebook Watch also added to the blow, the company said. The shakeup rattled investor confidence, wiping out more than $1 billion of the company’s market value the next day.
Rosenblatt says “it will be crucial for them to answer how much for the lower expected guide is driven by strategic alternatives for the WWE Network versus increased investment.”
(Updates with context, analyst comments)
To contact the reporter on this story: Kamaron Leach in New York at [email protected]
To contact the editors responsible for this story: Catherine Larkin at [email protected], Richard Richtmyer
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