Is WWE Stock a Buy?

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Good day subscribers thank you so much for joining me today i am jeremy this is a financial education channel and today we’re talking about wwe stock is this one a buy this stock had been requested by a few you guys out there and i thought this would be a really fun one to look at and you know what i had a lot of nostalgic moments looking at this company because i

Remember the days when i used to watch wrestling and watch my favorite wrestlers like bret hart and d-generation x and the undertaker and kane and all these rawson wrestlers wrestling around in the plotlines were beautiful it was an awesome thing in it’s a big part of my childhood so i had a lot of nostalgic moments just looking over this company and whatnot so it

Was a really fun one for me to look at today i really enjoyed it and let’s see if this talks about is this stila buy let’s go ahead and look at this guy’s hit that thumbs up button if you like these videos leave me a comment if you’d love to see a particular stock broker down on next week’s episode of is it a buy so first off we’re here on the investor relations page

Which is on the website is we’re under investor relations and now we’re looking at the annual report and i suggest you guys if you don’t know what wwe is you read through those couple paragraphs i have up in your screen now basically in simple terms without all that mumbo-jumbo wwe is basically a wrestling company that they make plot lines of characters and

Those characters wrestle around and they fight and do all these types of things in wwe gets a lot of money from a lot of different ways that we’re gonna get into here guys in just a minute but that is basically the business in a simplest form it’s a entertainment company that involves making popular’s plot lines and story lines that can get people you know to feel

Some type of way you know toward one person or another i hate this person or love this person and they wrestle and they have a match and the winner wins basically so it’s sports entertainment at its finest no how do they get all their money a lot of people think they just get their money from ticket sales at the shows and from people buying pay-per-view or for the

Ads that are shown on the tv stations with at play wwe well they get a lot of money from a lot of ways guys look at all these different ways to get money so from the media divisional they have the network which revenues consists primarily of subscriptions of wwe network which shows our network they just launched a couple years ago fees for viewing our pay-per-view

Programming and advertising fees they get television revenue revenue consists principally of television rates and advertising they have home entertainment which is like sell dvds blu-ray burg blu-rays subscription and all the types of things they also have digital media revenues consists principally of advertising sales on our website third-party websites including

Youtube and sales of various broadband and mobile content they get money from live events which is from ticket sales basically they get money from licensing licensing revenues consists principally royalties of our licensing fees related to various wwe themed products such as video games toys and apparel i can’t tell you i had a whole lot of wrestling toys growing

Up as a kid holy smokes probably my parents probably spent hundreds of dollars buying all those action figures venue merchandise revenue consists of sales of merchandise a tour live advance they have the wwe shop wwe studios so they have a lot of ways of bringing in revenue guys a lot of ways and we’ll get into the breakdown on how much money do they get from this

Segment versus this segment all those kinds of things guys so next up we’re the want to look at here we’re in the risk factors section of the annual report now and this i think is very important when you’re thinking about risk factors for wwe so our failure to retain or continue to recruit key performers could lead to a decline in the appeal of our storylines in

The popularity of our brand of entertainment which could adversely affect operating results so this is kind of the the worry with wwe because basically what w2b has to do all the time they have to build up you know huge superstars through these plot lines and they build them up and build them up and build them up to be these big huge legends right and those 5 or

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10 people is what 90% of the people that watch w2b actually care about the other you know 10% maybe they care about everybody and whatnot but 90% of people they care about the superstars the ones that are you know in the main events meet in the paper those kinds of things so what the risk is is if you lose somebody that you’ve built up to that state you know that

That level because they want more money at that point or something like that that can definitely hurt your brynn because then it’s harder to get people to dish out the money for the pay-per-views or just be as interested in the content because you only have five or ten really big huge name superstars built up and that’s what people care about and that’s kind of

The same for almost any any sport of any kind whether it’s whether it’s a sports entertainment like this whether it’s mba i mean imagine if you know a couple of the biggest superstars in the nba went out of the playoffs i can tell you’re paitings would be down huge imagine if lebron james and steph curry somehow got hurt and didn’t play in the finals or whatever

Not the finals but in the playoffs i can guarantee your ratings for the playoffs would be down substantially same thing with wwe if they lose you know a couple their top guys ratings go down and i’ve seen this as a as a kid growing up watching olsen someone that’s in a really thick you know storyline olsen they’re they’ve gone either because the injury or because

They want more money or something like that and then it’s like okay that kind of died off that’s kind of weird and then you’re not as interested so that’s a big risk and by far in my opinion the biggest risk to wwe is that risk so next one up here this is also in the risk factor section this could be a wrist or a good thing it depends on which way you look at it so

Basically we’re looking at this paragraph here we have class a common stock and class b common stock the class a common stock which is by the way the one you and i can buy regular investors the holders of class a common stock generally have rights identical to holders of class b common stock except that holders of class a common stock are entitled to one vote per

Share and holders of classic b common stock are entitled to 10 votes per share so we’ve seen this in a lot of companies we’ve looked at here guys i remember facebook was one of these that zuckerberg basically has controlled the company because everyone share you buy for every one share he has he has ten votes for every one of your vote so he controls the company

And what gets voted upon and who gets picked his executives and the board of directors and all those kinds of things he really controls up same thing here this big man that guy controls the company you know even if all of us want to do something about the company and make changes we can’t it’s really in his control we can try but remember we got one vote per share

He’s got ten votes per one share of his so it’s totally unfair guys but at the same time you know look at the company he’s built here from the ground up it’s pretty dang amazing maybe he’s a the right guide it could be controlling it and making these type of decisions rather than you and i and other investors out there that’s something to think about there next up

Here we’re looking at the breakdown of where they get their money from so basically media division is the cash count for them four hundred twenty five million dollars it got in 2015 that was up from 339 million 2014 25% increase next biggest category is live events which is ticket sales basically 124 million from 110 million its thirteen percent growth very nice

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Growth i’m seeing your consumer products division which is like you talked about action figures those kinds of things they went from 98 million in 2015 to 70 or excuse me they did 98 million in 2015 last year they did 78 million only in 2014 so that’s 26% growth wwe studios revenue was down 35% but that’s such a small number that who even cares corporate another

That was up a little bit but who cares overall total revenue went from 542 million in 2014 to 658 million 2015 21 percent growth this is a company that they’re growing very nicely based upon what we see here from these these year-over-year results guys that is phenomenal growth and we see that the majority their money they’re getting from the media division and

That main category is growing very nicely all three of their main categories grew substantially from 2014 to 2015 media division live events and the consumer products division that’s a really good sign guys next up here we’re just looking at the overall income statement over the past couple years they did five hundred and seven million dollars in revenue all the

Way over on the right-hand column there in 2013 all the way to six hundred and fifty eight million 2015 which is all the way left-hand column they have on now we’re going down toward the bottom they’re looking at net income or loss so 2013 then 2.7 million dollar basically net income then they lost 30 million dollars in 2014 that was a lot because they are pushing

The new programming which was a whole subscription model and whatnot then they begin profitable again last year at 24 million dollars in a net income so it’s a good sign they they’re back to profitability to go from a huge loss like that to a nice game it’s a very good sign now you know i’m thrilled with seeing that let’s look at the balance sheet how is the balance

Sheet if it doesn’t have good balance sheet we’re not interested so we’re looking at the left-hand column here 2015 38 million dollars in cash very nice short-term investments which is right under that sixty four million dollars then we’re going down a few lines here to investment securities which is basically long-term investments they have 22 million dollars in

Long-term investments then we’re going down to a liability section we’re looking at current portion of long-term debt which is basically aka short-term debt 4.4 billion and then long-term debt of seventeen million there so basically they have about 20 20 million dollars in debt and they have about oh gosh 120 billy our excuse me 120 million dollars in cash so

Basically they have about a hundred million dollars more in cash and investments than they do debt that’s a very nice balance sheet for a company wwe size and very nice balance sheets now something i saw when i was looking at his company that i think is a really smart move from obviously people watch wwe on tv or i don’t know what networks cover them now but they

Watched on tv they watch it on the new app they have which is basically a subscription type model so that’s the way they get people to watch but they also have the youtube channels which i think is very brilliant so they have their main youtube channel which has almost 14 million subscribers they put all types of videos on there those video hoes get tons of views

Heads you guys can see the video they just put up has like three hundred eighty thousand views in the eight it was just released eight hours ago and so that’s really smart then they also have their own superstars some of the big names they have them having their own channels so if you want to watch a fight from a certain time or whatnot and those videos on that

Youtube channel series you can actually watch that i think that’s a brilliant they have john cena in there i show you this guy named kalisto he’s got his own channel and that’s all run from wwe i think that’s really smart because sometimes people want to watch these old matches just because they were enjoyable i remember i think there’s unnaturally 1996 or something

I watched i was between mankind and the undertaker and they were throwing each other on thumbtacks and all these things and it was it’s so ridiculously crazy to watch guy got thrown off the cage 15 feet to the ground i could still watch that that match today you know but until now basically if you want to watch that it would just be people randomly uploading it

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You know kind of like i guess you could say just randomly uploading and then you could watch it on their channel so wwe would make any money off that no wwe can make money off that that’s a very smart idea on their part in my opinion last up here or not last up but hitting toward the m income statement for the latest quarter so what we see here is net revenues

Are down in the latest quarter from 166 million in 2015 264 very bad sign their net income did go up just a bit from ten point four bill ten point four million dollars in 2015 to eleven point four excuse me eleven point 1 million dollars in 2016 so basically look at this income statement from last quarter i’m like oh yeah you were growing really nice and then now

On son it’s just mmm it’s just done i don’t understand why it just ends like that is the growth out of this name is this is this it knows it was experienced that nice growth the last few years and now it’s just a stagnant company mmm might be and we’ll have to see here so and that’s what it what analysts expect for next year so analyst and this is all the way in

The right hand column analysts expect seven hundred and fifty seven million dollars in average that’s the average analyst estimate for revenue for next year that would be six percent growth six point one percent growth so analysts do expect this company to get back to slight growth so that’s a good time but at the same time you know it just worries me when i see

A quarter when you’re growing growing so fast and then also new you riposte little down numbers like that that’s a little worrisome because i just worry about stagnation and then to go from a double-digit growth of 21% to now a 6% growth expected that’s a big slowdown and growth their huge slowdown now let’s go ahead and look at some key statistics here so the

Stock closed out at around excuse me about $18.50 now that is in between its 52-week range of 14 $20 on the low side it was all the way up to 21 dollars and 55 cents on the high side they do pay a small dividend of 48 cents a share which is actually more than there eps i don’t like companies that do that and then they have a mercaptan 1.4 billion of small market

Cap they have a p/e ratio of 57 currently they have a forward p/e ratio of 31 so i look at this company and it’s not a buy for me because of valuation concerns when you’re trading at a p/e that’s over 30 and your business alson seems to be stagnating or maybe you might be experiencing you know single-digit growth that’s – that’s too much of a price for me to pay

I cannot pay a forward p/e over 30 when it’s a company that just also is stagnating or expected a single-digit growth i can’t – and if this was still a double-digit grower and we’re looking at twenty one twenty two percent growth in the last quarter then also maybe i’m interested but as percent growth for next year that doesn’t really interest me when it’s a p/e

That high and we’ve seen a quarter where they actually had revenue go down recently so for that reason wwe stock is not a buy for me guys let me know what you think is wwe stock i’ll buy for you i would love to hear what you guys have to say on this here thumbs up if you enjoyed this video if you came across it and you i’m not subscribed yet you may want to we

Talk personal finance in the channel entrepreneurship i’m a business owner i give so many of my business tips out and we also talk the stock market the most in this channel including this series we do every single week leave me what you guys would love to see broken down next week thank you guys and have a great day

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Is WWE Stock a Buy? By Financial Education

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