World Wrestling Entertainment, Inc. (NYSE: WWE) saw its shares trading upwards by 8.44% in pre-market trading. This comes after long-time CEO Vince McMahon stepped down from his position on Friday due to investigations into sexual harassment and associated pay-offs. He was replaced by his daughter Stephanie McMahon and Nick Khan, the company’s president, as co-CEOs.
Here is everything you need to know about why WWE’s share price increased on Monday.
Why did Vince McMahon Leave his post as CEO?
Vince McMahon served as WWE’s CEO from 1982 until 2022 when he announced his retirement via Twitter on Friday. McMahon is under investigation by the board of directors, Securities and Exchange Commission (SEC), and federal prosecutors. The investigation into McMahon is over claims of sexual misconduct and allegations of $14.6 million in unrecorded expenses since 2006 to ensure the silence of those involved.
What are the rumors around WWE?
The share price of WWE increased on Monday, reaching a 52-week high as investors became more bullish on the potential sale of the entertainment company. One analyst even upgraded the company to a “buy” rating while raising its share price target. This was “based on a greater likelihood that the company is sold with Vince McMahon stepping down.”
There has been a lot of speculation amongst investors that larger media companies could be interested in acquiring the company. WWE has a valuable intellectual property portfolio, loyal fanbase, upcoming tv rights renewals, and major profit-generating tournaments. The most popular predictions for a potential acquiring company include Disney (NYSE: DIS), Comcast (NASDAQ: CMCSA), and Amazon (NASDAQ: AMZN). Comcast is the most popular name currently being mentioned, as the companies already have a close relationship due to their licensing agreements.
WWE announced positive Q2 estimates yesterday, contributing to its rise in share price. However, it did state that these are subject to revisions as it has only recently discovered the unreported expenses used by Vince McMahon. Revenue is forecast to reach $328 million, up from $266 million in the previous year. Management also expects an operating income of $70 million, which is 52% higher than in Q2 2021. WWE’s share price is currently up 40.57% over the past seven months, significantly beating the major U.S. indexes that have experienced declines.
Shane Vigna, Author at MyWallSt Blog