WWEconomics: In-depth stock analysis and recent financial news
Submitted by Mr. Tito on Saturday, March 29, 2008 at 9:03 AM EST



Disclaimer: This report is for entertainment purposes only. Readers should invest at their own risk!

Welcome back to write-up formerly known as the "Economic Bodyslam" now known as the cleverly named "WWEconomics". The last issue involving the WWE stock was through 2/8/08. This report wanted to sit back see how accurate it's stock predictions were. The last edition suggested that in the upcoming weeks, heading towards Wrestlemania, the stock would rise above $16 in the upcoming weeks. Once Wrestlemania is done, however, this report figured that the stock would come back to earth within a tight $14-$16 range for the rest of the year.

2/11/08: $15.31
2/12/08: $16.29
2/13/08: $16.83
2/14/08: $17.01
2/15/08: $16.84

2/18/08: President's Day - Markets Closed
2/19/08: $17.20
2/20/08: $16.99
2/21/08: $17.06
2/22/08: $17.78

2/25/08: $17.80
2/26/08: $17.66
2/27/08: $17.59
2/28/08: $17.75
2/29/08: $17.70

3/3/08: $17.57
3/4/08: $17.86
3/5/08: $17.77
3/6/08: $17.33
3/7/08: $17.60

3/10/08: $17.48
3/11/08: $18.16
3/12/08: $18.60
3/13/08: $18.58
3/14/08: $18.16

3/17/08: $18.30
3/18/08: $18.72
3/19/08: $18.78
3/20/08: $18.61
3/21/08: Good Friday - Markets Closed

3/24/08: $19.38
3/25/08: $18.80
3/26/08: $18.83
3/27/08: $18.25
3/28/08: $18.26



52 Week High: $19.48
52 Week Low: $13.35

For the most part, this report was correct. The stock has surged above $16 heading towards Wrestlemania. What should be noticed, however, is that the WWE could have been looked as a "safe haven" for equity investors. The Stock Market has been on a wild ride for the past 2 months with economic uncertainty, bank/investment issues, jobs reports, Federal Reserve uncertainty, and high rates of inflation. With the stock market being risky, investors are opting for safer investments.

For one, they are jumping to the bond market and this causes short-term bond rates to decline (currently under 2%, I believe). Many investors are also buying up commodities, such as Gold, Oil, or even Wheat (hence prices being pushed up on those products). Additionally, if an investor wants to remain trading stocks, they'll go for the more safe or traditional stocks.

In the case of WWE, it appears to be a safe investment. The 4th Quarter earnings were shown to be strong and the WWE declared a dividend of $0.36% per share, a 50% increase due to a recent tax ruling. Assuming the dividend holds, this provides for an annual return of 7.89% on your investment of WWE shares. Keep in mind that the WWE boosted their dividend while many banks and investment firms are slashing theirs for to fund capital shortcomings.

Other good news arrived for the WWE:

- Jeff Hardy was suspended by the Wellness Program for apparent drug use. When I say "good news", this is rest assuring for investors because it's good public relations news for the WWE to show the effectiveness of their drug problem. The WWE stock has SERIOUS reputational risk due to the perceived high levels of drug use and due the the high fatality rates of past and present WWE stars. To further the confidence in the WWE testing system, a development wrestler was also suspended.

- The WWE announced a new CFO on March 17th. The WWE board and Linda as CEO are still in place. Hiring someone with experience immediately after the retirement of their current one shows good business continuity planning. WWE has been strong on their accounting department end of things and this should continue to keep costs down no matter what revenues do.

- Big Show vs. Floyd Mayweather is getting mainstream press, especially on Mayweather's end. Keep in mind that professional boxing's appeal has been waning for years, but Mayweather seems to be drumming up press attention quite well. Is it worth $20 million that the WWE is paying him (compared to about $4 million that the WWE payed a more controversial Mike Tyson in 1998 that paid off HUGE)? Maybe not, but the WWE should be able to write-off some of that salary for advertising costs and if Mayweather can bring more viewers, it may be worth the risk in the long run. I like the press that it brings, but for $20 million? For a boxer, whose sport is getting creamed by mixed martial arts?

- WWE Smackdown vs. RAW 2009 will again hit major consoles this fall. The WWE continues to do extremely well with media that hits their key youthful demographics.

- The WWE announced the publication of WWE Kids, a new magazine targeting 6-14 year olds. Provided how lewd that the current WWE Magazine can be with photoshoots, this could be better for parents to stomach. We'll see how long it lasts, however, for the WWE has a history of getting bored with such additional projects. Additionally, is there a demand by kid for a cleaner magazine? I remember as a kid, the Miss Elizabeth photo shoots were the draw of the magazine...

SUMMARY: The WWE seems to benefit well from the rest of the stock market's downturns this time around, provided solid financials and a nice dividend return. This report still expresses concerns, however, with this stock hitting peaks under $20 and never going above that. We'll see, as the WWE tends to hit a slower time in their business as the Summer months are around the corner. WWE's interest peaks at Wrestlemania and dips until Summerslam officially kickstarts the Fall season. If you bought at $14, cashing out at $18 or so can net you a nice profit. However, if the dividend holds, that's a nice return on your asset, especially when you bought when the stock was at a 52-week low. This report will suggest a "Hold" for now, thinking that the price could be a bit too high and may be reaching its peak, provided prior year histories.

WrathofTito@yahoo.com








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