The WWE stock price may have recovered somewhat in the lead up to SummerSlam 2014, but now a class action lawsuit is alleging that WWE stock holders may have been misled by Vince McMahon and the WWE management.
In a related report by The Inquisitr, it's believed that the WWE Monday Night RAW video taping may be combined with WWE Smackdown in order to save money. The WWE layoffs may be continuing this week since it's believed the company will be releasing at least two more WWE superstars.
Recently, the separate law firms of Alfred G. Yates Jr. and Vincent Wong, Esq, both filed similar lawsuits against the WWE. According to Dave Meltzer of the Wrestling Observer, it's claimed that WWE stock holders were misled.
"[The WWE lawsuit is] representing people who purchased stock between October 31, 2013, and May 16, 2014. The complaint, like the other few similar ones, allege the company issued materially false and misleading statements regarding the company's ability to negotiate a television contract price. During the period, the company issued releases showing its ratings being similar to NASCAR, with the idea that would be a barometer of what WWE could get for rights fees. However, WWE's new deal ended up being worth less than one-sixth of what NASCAR's television deal was."The second lawsuit by Wong states the "company violated securities law by failing to disclose the company's true market value in television negotiations."
As of this writing, the WWE stock price is less than half its value from its March of 2014 high. The WWE stock price is at $14.64, closing only slightly down from its three-month set on Monday. According to Zacks Equity Research, "there could definitely be trouble on the horizon for this company... because WWE is now in overbought territory with an RSI value of 77.56." In addition, they note that the WWE stock priced is an overall downward trend, and the WWE management has issued two earnings estimate revisions that were lower than before.
Considering that Vince McMahon has a 52 percent stake in the WWE stock, any increase in price would benefit the family ownership tremendously. As such, they have been attempting to raise the WWE Network subscription to the goal of one million by the end of 2014 by changing the WWE Network price. Besides the $9.99 monthly rate, they also have a $12.99 per month deal with no commitment. The good news is that the SummerSlam 2014 attendance was at 17,537, while the 2013 show only had 14,500 attendees.
Before SummerSlam 2014, the company had a revenue of $514 million in the last 12 months. The streaming services of the WWE Network has a higher operating cost and is not expected to be considered self-sustaining until after the one million subscriber mark, although the company is attempting to cut costs by reducing spending on fireworks, props, shutting down WWE Magazine, and other items. But the WWE layoffs actually will cause a third quarter loss due to the cost of severance packages and other termination costs. It's believed that that the WWE Network international launch into 170 countries will increase their subscriber base, but at the last official count they had only reached 700,000 members.
What do you think Vince McMahon should do about the WWE Network?