World Wrestling Entertainment owner Vince McMahon was a billionaire when he woke up Friday morning, but after shares in his empire were bodyslammed in the stock market, he ended the day knocked out of the billionaire's club.
Shares in WWE went down by more than 40 percent Friday, reports Forbes
, but in fact took its hardest hit overnight. On Thursday, the stock closed at $20 a share, but by Friday morning, it opened at below $11. Overall, McMahon lost $350 million by the market's close.
McMahon remains an extremely wealthy man, with a net worth estimated at about $750 million. But his fortune fell after stock in WWE plummeted when the company signed a new television deal with NBCUniversal
for less than investors had hoped for.
WWE netted a 50 percent increase over its last television agreement, but investors had hoped the new deal would more than double or even triple its prior contract.
George Barrios, chief strategy and financial officer for WWE, said the company has never
commented publicly on expectations, and that it was "undervalued by the math that we had done.”
McMahon's personal net worth hit an all time high in mid-March, when it reached $1.6 billion after the company's shares soared 89 percent in the first three months of this year, Forbes reports.
But after WWE announced that the WWE Network
, its new online streaming service, had just 667,000 subscribers, far fewer than projected, shares took a 29 percent freefall, and McMahon lost $325 million.
Adding to WWE's woes, Intrepid Capital Management, which was once WWE's largest outside investor, sold its 10 percent stake in the company. Intrepid Portfolio Manager Jayme Wiggins told Forbes
that he believes McMahon was betting too much on his new network.
The streaming service costs $9.99 a month — with a six-month commitment — and includes pay-per-view matches, a savings for fans who would normally have to pay $55 and more to watch the events legally.
Nonetheless, the WWE Network needs 1.5 million subscribers to break even, said Wiggins. Two million subscribers would bring an estimated $50 million in profits, and at three million subscribers, the network would gain $150 million.
"The question is why their numbers are so low given this renewal," said Wiggins. "With the information that they put out there, it seems to imply that their core business isn’t making money."
But McMahon, who owns 52 percent of WWE, built his fortune on TV deals, which enabled him to buy out his father's regional wrestling company and take it nationwide. But his new streaming network could cut into those deals and into his pay-per-view audience, which attracted people to pay large fees for events such as Wrestlemania that they otherwise would not get to see unless they attended a live show.
And as WWE's TV numbers grew, McMahon's empire grew even more through live performances, making him a star as well and a billionaire for the first time in 2000.
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