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WWE shares crash after earnings guidance and revenue disappoint

WWE logos are shown on screens before a WWE news conference at T-Mobile Arena on October 11, 2019 in Las Vegas, Nevada.(Photo by Ethan Miller/Getty Images)

World Wrestling Entertainment (WWE) shares fell dramatically after the company announced its Q3 revenue fell short of expectations and management reduced its outlook for operating earnings.

WWE’s Q3 revenue came in at $186.3 million, which missed Wall Street’s consensus estimates of $191 billion. Management pointed to decreased live events ticket and merchandise sales.

Shares dropped by as much as 19.9% during Thursday’s trading session.

During the period, WWE earned $0.06 per share, which beat expectations of $0.02.

Despite being the global leader in its field, WWE has not been without its problems. The company started the year with disappointing Q1 results, and TV ratings over the past few years have fluctuated, with last week’s episode of “Monday Night Raw” drawing its third-worst rating of 2019. The company’s live events business has also taken a hit due to lower North American attendance, with live attendance revenue down 13% compared to the prior-year quarter.

But despite it all, one thing that has always gone in the company’s favor is the fact that WWE is a global company with a myriad of fans worldwide and a series of lucrative international TV deals. However, two of those deals have been stalled.

Management now expects WWE to report full-year adjusted operating income before depreciation and amortization (OIBDA) in a range of $180 million to $190 million, down from a prior forecast of $200 million.

LAS VEGAS, NEVADA - OCTOBER 11: WWE champion Brock Lesnar is introduced at a WWE news conference at T-Mobile Arena on October 11, 2019 in Las Vegas, Nevada. (Photo by Ethan Miller/Getty Images)

Guggenheim analyst Curry Baker spoke to Yahoo Finance in August and highlighted just how big the international market, especially India, is to WWE’s growth. “India is WWE’s number one market in terms of content consumption and audience size, with sports viewership trailing only Cricket.”

On a call with analysts, WWE’s George Barrios, co-president and director, said that the company does expect a deal TV deal to be done in India by year-end. He also spoke to the complexities that can arise as far as international deals are concerned.

“We’re very focused on 2020 as we are in ’19. We’re very focused on the value of that live content in 2020 - 2024, 2025 in the U.S., especially. Intervening years between ’20 and 2025 are really important for us,” he said.

“And then frankly, we think beyond 2025, especially in some of these international markets, some of these opportunities will take time to develop. But I’d like to say they’re not public, so it’s hard to track. But when you look at the NBA’s success in China, that happened over 25 years of investment. And my guess is … [in] some of those early years, there were losses. But I guess they’re happy with the relative performance of that business over time. So I think for us, we’re trying to think across those time frames, But clearly, we’re also — we are focused on the ’19 and 20 as well. It’s not just the long term ... We’re trying to make the right tradeoffs.”

Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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