We’ve noted before how WWE had been in talks with top players to sell pay-per-view streaming rights, and that ESPN was considered to be a top contender for their ESPN+ streaming service.
Loop Capital analyst Alan Gould downgraded WWE stock on Wednesday, from Hold to Sell, with a price target of $30.00, from $43.00. Gould told investors that the announcement we covered earlier this week, on WWE Chairman Vince McMahon entering into a variable prepaid forward contract to pledge approximately 3.5 million shares of his Class B common stock as a way to give WWE liquidity during uncertain times amid the coronavirus pandemic, indicates that a “transformative business deal” will not be happening. Gould told investors that he believes Vince would not have entered into he contract if a the big announcement was coming.
Regarding the contract Vince entered into, Bloomberg noted that this basically serves as a cash advance. Vince agreed to sell the shares at a future date, in March 2024, and he will get the cash now – around $80 million to help the company. He doesn’t have to turn over the stock or pay taxes on the sale until then.
Dave Meltzer noted on Wrestling Observer Radio that the downgrade is a sign that WWE’s potential deal with ESPN is “dead” but that may not be the whole story. Meltzer previously noted that ESPN and WWE were far apart on money.
Gould told investors on Wednesday that WWE is financially strong and its business will likely bounce back from taking a hit from the COVID-19 situation, but not to where it had been.
According to Deadline, Gould noted how WWE will generate less revenue and WWE Network subscribers with WrestleMania 36 this year as it was moved from Raymond James Stadium in Tampa. Gould also mentioned how WWE ratings have been slipping for WWE NXT and RAW. He was concerned that WWE won’t be able to continue to provide weekly live TV shows if talent are getting sick, or if the government requires social distancing. WWE pulled their financial guidance on March 12, like other companies have done recently. Gould lowered estimates, particularly for the second quarter, due to the impact of the coronavirus.