Is WWF stock a Buy?

The company is in the news this week and the stock has been on a tear for months now, so what does the future hold for World Wrestling Entertainment (World Wrestling Entertainment Stock Quote, Charts, News, Analysts, Financials NYSE:WWE)? 

Last month, WWE announced a merger with UFC to form a new publicly-traded company, with the new name presented this week as TKO Group Holdings. The sports entertainment company will trade on the New York Stock Exchange under the TKO ticker and the CEO will be Ari Emanuel, the current head of UFC’s parent company, Endeavor. WWE Executive Chairman Vince McMahon will be TKO’s Executive Chairman. Existing WWE shareholders will hold a 49 per cent interest in TKO.

The two companies say as a tag-team they’ll be worth over $21 billion with a fanbase of more than a billion people.

“Given the incredible work that Ari and Endeavor have done to grow the UFC brand – nearly doubling its revenue over the past seven years – and the immense success we’ve already had in partnering with their team on a number of ventures, I believe that this is without a doubt the best outcome for our shareholders and other stakeholders,” said Vince McMahon in a press release.

For fans of WWE, the stock has been a winner for the better part of a decade now, even as its product’s popularity has waxed and waned over the years. The 1990’s, for instance, saw the then-WWF expand to a global reach beyond its US-based audience, with charismatic figures like Hulk Hogan gaining international celebrity. 

The late 1990’s involved a battle between WWE and the WCW (World Championship Wrestling), while the 2000’s and 2010s saw the WWE attempt to become more family friendly and branch into different digital media such as streaming and YouTube.

WWE’s popularity is still strong, although viewership declined over the 2010s. But the company has been as tenacious as a choke hold, as evidenced in its recent financials. For the 2022 year, WWE saw its revenue climb by 18 per cent to $1.3 billion, a record for the company, while operating income rose by 11 per cent. 

Media rights are the bread and butter for WWE, with content rights fees for series like Raw and SmackDown continuing to pull in huge dollars. WWE’s ability to monetize its content is legend, while the return of ticketed live events in the post-pandemic era have helped further drive up revenue and earnings.

The market has been cheering from the stands, as well, with WWE’s share price up a huge 47 per cent in 2023 alone. 

Is there more upside to come? According to TipRanks, based on eight analysts with 12-month price targets, the average target is $121, which would represent a 20 per cent increase in value.