- 6:17 am ET: Barclays analyst David Joyce raises stock price target on WWE shares from $57 to $61.
- 7:21 am: Loop Capital analyst Alan Gould upgrades WWE from Hold to a Buy rating.
- 8:00 am: MKM Partners’ Eric Handler raises price target from $70 to $79.
- 8:56 am: WWE issues press release and associated 8-K filing with preliminary Q2 financial results, also stating, “WWE executive Paul Levesque will assume all responsibilities related to WWE’s creative, in addition to his regular duties.”
- I’m told by a source with knowledge of the situation that Bruce Prichard is still leading the writing team and Paul Levesque has final say in creative, just as Vince McMahon previously did.
- WWE’s preliminary financial results report adjusted OIBDA of $92 million for the second quarter (April 1 to June 30), operating income of $69.8 million on revenues of $328 million.
- These financial results are higher than the consensus analyst estimates and my own. My latest estimate that I was working on but hadn’t published yet estimated adjusted OIBDA of $79.4 million, operating income of $60 million, and revenue of $322 for the quarter.
- A pre-release of WWE’s financial results is unusual.
- 9:19 am: WWE shares were up in premarket by 2.76%, to $68.05, ahead of the opening bell.
- The 8-K notably refers to Vince McMahon’s departure from WWE as a “resignation”. Press releases including today’s have referred to his exit as a retirement. The 8-K states: “On July 25, 2022, the Company issued a press release announcing its preliminary results for its second quarter ended June 30, 2022 as well as the resignation of Vince McMahon and the appointments of Stephanie McMahon and Nick Khan”.
- Adjusted OIBDA of $92 million for Q2 is above WWE’s latest guidance of $80 million to $90 million, as noted in the 8-K.
- The 8-K notes that payments Vince made from 2006 to 2022, presumably related to NDAs reported by the Wall Street Journal, “that were not recorded in the WWE consolidated financial statements, should have been recorded as expenses in the quarters in which those agreements were made.”
- WWE has identified unrecorded expenses totaling approximately $14.6 million. This amount is greater than the Wall Street Journal’s latest report on the subject on July 8, that Vince paid more than $12 million related to NDAs.
- Because of these unrecorded expenses, WWE will revise its financial statements for the years of 2019, 2020, 2021, and for the first quarter of 2022 when it reports second quarter results.
- WWE is “working with the goal of issuing such financial statements by August 9, 2022”, which is three Tuesdays from now. I had previously anticipated, based on the normal schedule of reporting, that WWE would report earnings on August 4.
- WWE’s investigation into Vince McMahon’s alleged misconduct is ongoing, according to the 8-K filing.
- Ominously, the filing notes WWE “has also received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas, or demands arising from, related to, or in connection with these matters.”
- WWE’s filing makes clear Nick Khan remains a member of the board of directors.
- 9:44 am: WWE stock has opened up more than 6%, crossing $70 per share.
- The aforementioned Loop Capital analysis says they believe WWE is more likely now to be sold.
- WWE’s board finding greater total payments ($14.6 million) made by Vince related to NDAs than WSJ reported ($12 million) seems to suggest there is at least one additional NDA payment the board has found beyond the four NDA payments WSJ has reported on.
- 11:30 am: Even if Vince’s payments related to NDAs were made with his own personal money, they are considered payments made to benefit the company, I’m told by WWE media relations. The $14.6 million total in known payments will be recorded in reissued financial statements throughout the course of 2019 to the present, so corrections to WWE’s financial results will be relatively minor and not material, I expect, since WWE recorded $77 million, $132 million, and $180 million in net income in the years of 2019, 2020, and 2021, respectively.
- It was emphasized to me there isn’t a meaningful business difference between whether Vince McMahon resigned or retired. The terms in this case are interchangeable.
- 12:00 pm: WWE shares are now trading at about $72, up 8.8% for the day while the major indexes are nearly flat. There’s also considerable action in options trading, with calls being made that WWE’s share price will increase by August 19.
- The Wrap’s Tony Maglio has tweeted that the reissued financial statements will record the NDA payments as a one-time expense and that doing so won’t affect profitability. It seems possible to me the corrections will affect GAAP profitability measures like net income and operating income, but may not affect WWE’s calculation of its preferred profit metric, adjusted OIBDA. I’ve asked WWE about this but haven’t heard back yet.
- Deadline has an article referencing Loop Capital’s Alan Gould’s stock report that mentions potential acquirers of WWE: Comcast (NBCUniversal’s parent), Disney, Amazon, Netflix, and Fox.
- LightShed analyst Brandon Ross also tweeted last week that his team believes Endeavor is the most sensible buyer of WWE. Endeavor also owns UFC.
- 2:30 pm: WWE shares have been holding at around $71 per share since noon. At current market value, Vince McMahon’s approximately 28,725,236 shares in the company are worth $2.05 billion, up from $1.90 billion at the close of the market on Friday, an gain in value of $150.5 million. The stock closed at $66.22 on Friday, just before Vince’s exit from the company was announced.
- 4:38 pm: The stock price closed at $71.81 per share for the day, up 8.44%, according to Google Finance.
- Trade volume on the stock was high. Just over 3.6 million shares of WWE changed hands today, the highest in more than a year since June 9, 2021 (when WWE was momentarily swept up as a meme stock after a post on subreddit r/WallStreetBets).
- All of Vince McMahon’s shares have a market value of $2.06 billion, about $160 million more than they were worth at Friday’s close.
- 6:30 pm: The Securities and Exchanges Commission and federal prosecutors have launched inquiries into the NDA payments made by Vince McMahon, according to a new report from The Wall Street Journal published this evening.
- Investigations from the SEC and federal prosecutors hastened Vince’s retirement announcement on Friday.
- Not mentioned here earlier, WWE’s 8-K published this morning noted that the board of directors’ investigation “expects to conclude that its internal control over financial reporting was not effective as a result of one or more material weaknesses.”
- The Journal’s report also notes: “In the past, Mr. McMahon told members of the board and WWE executives that he would remain in the job until he could no longer work, according to people familiar with his comments.”
- The Journal reports that the $3 million NDA agreement to the former paralegal and the $7.5 million agreement to a former talent were to be paid to the women over a number of years, as opposed to a lump sum. The agreement with the former paralegal was made in 2022 and the agreement with the former talent was made in 2018, and both women are still owed money.