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Investing in WWE (NYSE:WWE)

Written By Jeff Siegel

Posted August 22, 2014

ultimate warriorOne of my fondest memories as a child was watching wrestling with my dad.

This was in the early to mid 80s, when Hulk Hogan was king, the Ultimate Warrior gave new meaning to the word intense, and Jimmy “Superfly” Snuka made you believe that humans could really fly.

Those were great days. Not just because they were fantastic bonding moments with my father, but because for me, wrestlers were superheroes. Superman, Batman, Aquaman – those guys were illusions. Andre the Giant, Sgt. Slaughter, Junkyard Dog – those guys were real.

Over the years, wrestling ebbed and flowed in and out of my world, although I’ve never stopped being a fan. These days, I continue to watch. Mostly SmackDown, as Friday nights are the few nights I can actually enjoy some downtime. And I still enjoy it immensely, despite the strange stares I get from colleagues who find it incredibly odd that a peace-loving, libertarian treehugger like me still watches professional wrestling.

Of course, my enthusiasm for pro wrestling hasn’t always matched my enthusiasm for WWE (NYSE:WWE) as an investment.

A Good Buy

I fully admit that I’ve never really followed this stock much. I considered playing it back in 2009, after it fell below $10, but I didn’t pull the trigger. Certainly I regret that decision, as I could’ve nearly doubled my money inside of a year.

I considered picking up the stock again back in May after it took a nasty fall that nearly wiped out half of its value in a matter of days. $11 a share seemed to be a pretty good buy, but I hesitated again. Since then, the stock has come back by about 30%. It was a great buying opportunity, but I slept on it. The question now is will the stock continue to rally, or have I missed the boat again.

While I’m certainly impressed with how aggressively the stock has come back, I think there may be a bit more steam left in this engine. I do believe the stock is still a bit undervalued, and have determined that a one-year price target of $16 is not out of the question.


Of course, most of this will depend upon how effectively the company can grow its online platform and develop its international markets where, I believe, WWE will see a repeat of its early growth days in the United States.

Joe Johnson over at Bleacher Report commented on this very issue, even offering his own suggestions. I do believe some of these suggestions are spot on. One of which includes taking a pay-per view or special overseas.

Johnson writes. . .

For years, WWE would run European-only PPVs. Frequently, they were based out of England, but they would also go into Germany on occasion. Rarely would anything prominent happen on these shows since the American audience wouldn’t see it—and they are their bread and butter.

WWE has not run a globally available PPV outside of the United States, Canada or Puerto Rico since SummerSlam 1992. That’s more than two decades. While WWE has managed absolute dominance in the United States over that period of time, it has not once run a PPV internationally that wasn’t broadcast solely within that country.

It’s time for the WWE to take one of its bigger shows overseas. It would be more costly. The timing and logistics would be complicated. But if the WWE was to drop the Money in the Bank into an outdoor venue in England in July, the spectacle would be fantastic, and you’d likely hook thousands of Brits into plopping down a long-term subscription.

The average temperature in Mexico City in November is in the mid- to upper 70s. Sounds like great weather for an outdoor Survivor Series that features Rey Mysterio captaining a team of luchadores against some midcard villains.

While TNA is having its problems, it’s making a bold move in taking its biggest show of the year, Bound for Glory, to Japan. The time-zone issues would be too much for WWE to handle with one of their bigger shows, but while the company is intent on jamming two PPVs into one month at least once a year, why not take one of those and run it in the Tokyo Dome with a tape delay on the Network?

While touring house shows on an annual basis through these countries does help build fanbases, they won’t be as invested in the product on a month-to-month or week-to-week basis unless they think WWE is treating them as viable fans and not just a novelty act.

Bottom line: WWE has a lot of work to do, but this is one company that’s hard to bet against. Even when it seems like it’s ready to tap out, it grabs the rope, pulls itself up, and pedigrees the bears.

I remain cautiously bullish on WWE and maintain a one-year price target of $16.