World Wrestling Entertainment, Inc. (NYSE: WWE) is defying broader market trends this year.
The company’s stock is up more than 50% in 2022, hitting a 52-week high Monday, and trading at levels it hasn’t seen since summer 2019. The S&P 500, by comparison, is down more than 20% this year.
The stock’s strong performance this year occurred as WWE’s live wrestling events business came roaring back after months of Covid restrictions and the company increasingly became the subject of sale talks. The stock continued to do well after WWE’s longtime leader and biggest shareholder, Vince McMahon, retired from the company over the summer in a cloud of scandal.
Shares of WWE were effectively flat Monday after hitting $76.90. The company’s market capitalization is more than $5.6 billion.
Industry insiders believe WWE could be an acquisition target. A deal could come before the company’s next U.S. TV rights renewal – likely to be announced in mid-2023. WWE’s current U.S. streaming deal with NBCUniversal’s Peacock expires in 2026.
Analyst John Healy of Northcoast Research, who covers WWE, sees the stock’s success as a confluence of successful ratings, upcoming media deal opportunities and the speculation about a possible acquisition.
“That speculation has been going on for a long time, and I think will always be around this company given the unique asset 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 the revenue is coming from locked-in relationships” with media companies. Given a highly saturated media market, Healy expects high bidding for the rights to “Raw” and “Smackdown,” which are set to be renegotiated in the coming year.
WWE has 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, almost $15 million went to settle sexual misconduct allegations from four women against McMahon over the last 16 years, and $5 million went to Donald Trump’s foundation from donations made in 2007 and 2009.
WWE has hinted that the hush money payments to alleged victims, already the subject of an ongoing independent review overseen by the company’s board, are under investigation by other entities.
Still, WWE stayed in the family. Stephanie McMahon, McMahon’s daughter, took over as chairwoman and co-CEO alongside Nick Khan, the company’s former president. Stephanie’s husband and longtime wrestler Paul “Triple H” Levesque has taken over as the company’s top creative executive, the role the elder McMahon had before he retired.
Vince McMahon, 77, remains the largest stakeholder in the company, holding about 32% of shares.