WWE Stock Report for the week ending 5/4/2012 – An interesting take
The following report comes from writer Mr. Tito of LordsofPain.net. The statistics are courtesy of Yahoo! Finances. I am posting it here for the L.E.W.D. Crew to read for whoever is interested in this stuff because I felt Tito’s take was very interesting and informative:
Disclaimer: The following prepared report, using sources and data believed to be accurate and reliable, is for entertainment purposes only. Information and/or opinions expressed by the author are does not constitute a solicitation or an offer to buy or sell any security. Readers of this report are to buy or sell securities at their own risk.
Stock Market data source: Yahoo! Finance
4/27/2012 CLOSE: $7.93 per share
5/4/2012 CLOSE: $8.75 per share (up 10.34%)
52 Week Highs & Lows – through 4/27/2012
- Low: $7.77 per share
- High: $10.91 per share
Dividend Yield: 6.10%
Financial News/Reports relevant to WWE: 8-K Current Report – Results of Operations and Financial Condition – Fiscal Quarter Ending March 31, 2012
Main Stock Indexes – Week End Closes
- Dow Jones Industrial Average: 13038.27 (down -1.44%)
- NASDAQ: 2,956.34 (down -3.68%)
- S&P 500: 1369.10 (down -2.44%)
Economy and WWE Stock Analysis: A good helping of weak economic news this week. TheEuropean Union just cannot get out of its Debt hole and seems like the European markets are still spinning from the official Recession declarations by both England and Spain. With much of the “P.I.I.G.S.” (Portugal, Italy, Ireland, Greece, Spain) having major Debt problems, it could be a matter of time before a country or a bank financing the debt implodes, thus causing a chain reaction through the financial markets as many U.S. Financial Institutions (Lehman Brothers, Bear Stearns, AIG, etc.) did during 2008.
On the U.S. side of things, the Unemployment Rate was reported as 8.1% during April 2012, down from the previous month’s 8.2%, and 115,000 jobs added. Sounds good, right? Well, the Bureau of Labor Statistics counts only those aged 16 or older who have a job, are looking for a job, or are made available for a job… Don’t fit in those categories, you’re not counted in the Labor Force sourced in the Unemployment Rate calculation. A mixture of the United States being too dependent itself on Debt, both Government and Private, and wage/income real erosion caused by energy price hikes is putting a real clamp on our economy. For the 115,000 jobs, typically, 200,000+ jobs added per month is the historical clip seen during 1990′s and 2000′s for a significantly growing job market.
Thus, the Stock Market took a bath… Down across indexes and the Jobs Report bad feelings could carry into next week as well.
But the WWE Stock grew this week, baby! A good single day rise of the stock on Thursday, May 3rd when the 1st Quarter 2012 Financial Results were posted with the Securities Exchange Commission by law of making public offerings of stock to anyone interested in buying. Thus, you wouldn’t be able to tell that the market had a rough week by looking at the WWE’s week ending 10.3% stock price growth. If you look back during 2008-2010, the WWE stock was actually a solid, almost “recession proof” BUY. It was almost predictable that you could buy low during the Summer/Fall and then sell high around Wrestlemania time. It’s been a different story for 2011-2012, however. Seems like the weaker financial end of 2010 seemed to slow down this regular trend in addition to the WWE reducing the Quarterly Dividend from $0.36 to $0.12 for June 2011′s payment to investors.
The 1st Quarter Earnings Report was fascinating. Overall, the WWE had a better 1st Quarter in 2012 than it did during 2011. The WWE stock is easy to analyze because of how seasonal pro wrestling’s peaks and valleys are as well as the set periods of time, especially when Wrestlemaniais in April and isn’t counted during the 1st Quarter as it was in both 2011 and 2012. Thus, the 1st Quarter comparison for the WWE between 2011 and 2012 is very clean and among the best you could analyze among stocks. Net Revenues were up 3.68%, thus suggesting a rise in Demand for WWE goods/services for the 1st Quarter 2012 compared to 2011. WWE is very wise to mention their costs and profit margin should you not include expenses, such as preparing for the WWE Networkwith its significant administrative costs.
Breaking down the revenues further for the 1st Quarter 2012 vs. 2011 comparison…
-Live & Television Revenues: $75.7 Million (up +7.53%)
-Consumer Products: $35.5 Million (up +2.01%)
-Digital Media: $7.1 Million (up +16.39%)
-WWE Studios: $4.8 Million (down -44.19%)
It’s pretty obvious that the WWE is still reliant on being a Televised and Live Event touring company and by significant dollars. Thus, you can easily see why they want the WWE Network because of their deals with Comcast/NBC/Universal and Pay Per Views remaining, even in 2012, to be their strongest revenue stream producers even with each of their ratings/buyrate declines. Pay Per View and Television Rights netted a combined $46 Million, up in both categories. The Pay Per Viewbuys number was fascinating because for the Royal Rumble/Elimination Chamber actually had lower buys in 2011 BUT revenues grew thanks to High Definition (HD) buys. WWE might be able to further boost Pay Per Views by advertising how much better WWE Pay Per Views are in HD and also use HD to compare it to the grainy pirated feeds that’s eating into the Pay Per View revenues.
Live Events continue to be an ongoing cash cow for the WWE, as the WWE had fewer live events during 1Q 2012 versus 2011 yet it had more revenue. Many will ask why the WWE has two brands and the simple answer is to have 2 full rosters to tour around the country, even if Smackdown’s numbers could be better (still making the WWE money).
Merchandise did very well for the WWE during 1Q 2012. Home Video sales, licensing revenues up slightly (video games, toys, etc.), and live event merchandise sales did well. WWE should be concerned by WWE 12, the video game, having a considerable 25% decline in its gaming sales compared to last year. As a sign of the times, WWE Magazine was down by almost half and that can be offset by a boom in the online advertising seen on WWE.com. WWE.com has been one of the more innovative revenue generating websites around for over a decade now.
WWE Studios had their revenues sliced in half from $8.6 million to $4.6 million. WWE is a WRESTLING company, not a movie studio. Considering the impairment losses endured by WWE for previous Quarterly or Annual reports, it’s a wonder that the WWE keeps trying.
Nothing much mentioned for the WWE Network, other than noting expense related investment in the preparation of the network and putting “potential creation of a WWE Network” without any timetable present. The existing uncertainty of its creation and distribution, combined with the WWE’s issues in side projects (see WWE Films in this quarter), will handcuff this stock to possibly remaining under $10.00. WWE should take note of digital media jumping $1 Million during the 1st Quarter, as the transition to more internet and streaming based media with increased usage of Smart Phones and Tablets shouldn’t be ignored instead of too much dependence on Cable TV.
HOWEVER – The WWE has some upside to its financials. I would be especially curious to see how Brock Lesnar‘s addition to the WWE roster does for Extreme Rules and future Pay Per View buys. WWE advertising to see Brock kick someone’s ass in High Definition could be mighty impressive too.
As long as the WWE stock is around $9.00, this stock could be a BUY for a short period of time, as the stock could “pop” when the 2nd Quarter 2012 Revenues arrive for business between April to June. This would include the massive cash cow known as Wrestlemania 28 and if I’m right about Extreme Rules surging with buys, 2nd Quarter 2012 Revenues could cause a nice bump above $10.00 sometime in July or August. Might be worth a short-term risk at your own discretion.
Stock Position: None taken.
