Vince McMahon is probably not having a great weekend. On Friday, shares of World Wrestling Entertainment (WWE) tumbled 44% after the company reported poor results related to their premium channel subscribers and future revenue expectations. The company's share price dropped from $20 at the close of market Thursday to $11.27 when the closing bell rang Friday afternoon. That's the lowest the stock has been since its Initial Public Offering back in 1999. Even more painfully, shares of WWE are down 63% since it peaked just two months ago in mid-March.
With the drop, company CEO Vince McMahon has seen his net worth cut in half in under two months, from $1.6 billion on March 24, 2014 to $750 million today. On Friday alone, his net worth dropped more than $350 million, instantly removing him from billionaire status.
Here's why the stock crashed: Back in February 2014, the WWE launched a streaming subscription service called The WWE Network. The channel, which had been in the works since 2011, costs $9.99 a month. Subscribers get tons of WWE content on demand, and more importantly, they DON'T have to pay $49.99 for the big monthly Pay Per View events. With the network, the WWE is betting that they can earn more off the $9.99 subscription fees than the monthly $49.99 PPV fees. Presumably more people can afford to pay a consistent $10 a month for lots of content AND the events, as opposed to periodically paying $50 for a one time event. On Friday, company executives announced that in order to break even on these PPV losses, the network needs 1.3 million subscribers. Some analysts put that break -even number closer to 1.5 million. Unfortunately, after being live for a little under five months, only 670,000 people have signed up.
Friday's crash comes just two months after investors were swooning over WWE. In the preceding 12 months, shares of WWE had risen 230% thanks largely to high expectations with regard to the WWE Network. Shares hit an all time high of $31.39 on March 20, one month after the Network debuted. Vince's net worth had increased more than $800 million in under six months. The growth was so impressive that we even took the time to write a big article about the history of WWE and Vince's triumphant rise to the top:
"How Vince McMahon Became The Billionaire King Of Wrestling"
I guess we need to change the title now 🙁