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WWE is going to belly flop: portfolio manager

WWE's stock may have doubled but one portfolio manager thinks it's setting itself up for a belly flop.

Good news for "professional" wrestling fans: No, it's not actually real. However, now you can enjoy wrestling 24 hours a day, seven days a week from the comfort of your parents' basement.

On February 24, World Wrestling Entertainment will launch an online subscription service called the WWE Network. According to portfolio manager John Stephenson, that won't help the stock, which more than doubled last year.

"I think they're already on the top rope after that 111% increase last year," says Stephenson on CNBC's Street Signs' Talking Numbers segment. "There's nowhere to go but down."

(Read: WWE announces 24/7 Internet channel at CES)

For Stephenson, the quick rise in the stock, including a 65% gain since October, means shares in WWE are now expensive.

"Valuation isn't compelling at all, trading at 109 times forward earnings versus an average of 19.4 over the last three years," says Stephenson, who also believes the online service will cannibalize WWE's pay-per-view cable business.

"The core business is just deteriorating," he says. "You don't have enough young men looking at wrestling with its scripted program."

"You're looking at a model that's in decline and valuation is stupidly high."

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, disagrees with Stephenson's assessment.

(See: CNBC's Consumer Electronics Show 2014 coverage)

"This move to streaming is genius," says Ross. "Wrestling is a rating juggernaut, second only to the NFL in terms of average views. And, with those domestic TV deals all expiring this year, these guys are going to cash in coming and going."

Ross sees the key moment in the stock's chart was when it broke above from the 20-day moving average three months ago. "I think there's another $3 to retest the old high around $19," says Ross. "You want to be a buyer around $16. This stock goes higher. "

To see the rest of Stephenson and Ross on what's next for WWE, watch the video above.

More from Talking Numbers:

Why Ford shares could hit a speed bump
Why Amazon could hit $500 this year: Strategist
Here are 464 million reasons not to buy Twitter's stock: Strategist

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