Vince McMahon attends a press conference to announce that WWE Wrestlemania 29 will take place at MetLife Stadium in 2013 at MetLife Stadium on February 16, 2012 in East Rutherford, New Jersey.
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world wrestling entertainment It defies broader market trends this year.
The company’s stock is up more than 50% in 2022, hitting a 52-week high on Monday, and is trading at levels not seen since the summer of 2019. The S&P 500, by comparison, is down more than 20% this year.
The stock’s strong performance this year has been triggered by the resurgence of WWE’s live wrestling event business after months of Covid restrictions and the company has increasingly become the subject of sale talks. The stock continued to perform well after Vince McMahon, the company’s longtime leader and largest shareholder, retired from the company over the summer in a cloud of scandal.
The company’s shares were virtually flat on Monday after hitting $76.90. WWE has a market capitalization of over $5.6 billion.
Industry insiders believe WWE could be a takeover target. A deal could be reached before the company’s next US television rights renewal – likely to be announced in mid-2023. WWE’s current broadcast deal with NBCUniversal’s Peacock expires in 2026.
Northcoast Research analyst John Healy, who covers WWE, sees the stock’s success as a confluence of successful valuations, opportunities for upcoming media deals, and speculation about a potential acquisition.
“This speculation has been going on for a long time, and I think it will always be about this company given the unique assets that it is and the ownership structure,” Healy told CNBC on Monday.
He also noted that WWE is relatively insulated from consumer trends, saying that “two-thirds of revenue comes from closed relationships” with media companies. With a highly saturated media market, Healy expects to bid high for the rights to “Raw” and “Smackdown,” which are due to be renegotiated next year.
WWE also had to deal with McMahon’s controversies. He retired in July after it was revealed that he had paid nearly $20 million in previously unrecorded expenses.
Of those payments, nearly $15 million went to the settlement of sexual misconduct allegations from four women against McMahon over the past 16 years, and $5 million went to the Donald Trump Foundation from donations made in 2007 and 2009.
WWE has hinted that the silent payments to the alleged victims, which are already under ongoing independent review overseen by the company’s board of directors, are being investigated by other entities.
With that, WWE stayed in the family. Stephanie McMahon, McMahon’s daughter, took over as President and Co-CEO along with Nick Kahn, the company’s former president. Stephanie’s husband and longtime wrestler Paul “Triple H” Levesque took over as the company’s chief creative officer, a role played by the elder McMahon prior to his retirement.
Vince McMahon, 77, remains the company’s largest shareholder, owning about 32% of the stock.
Disclosure: Comcast owns NBCUniversal, CNBC’s parent company.
CNBC’s Chris Hayes contributed to this report.
Correction: This story has been updated to correctly characterize Nick Khan’s role in WWE.