Investors Not Impressed by World Wrestling Entertainment, Inc. WWE Network

Fresh off the buzz from the company’s signature annual WrestleMania live event, World Wrestling Entertainment (ticker: WWE) stock is getting punched in the face this week.

WWE shares were down for the second consecutive day Tuesday morning after the company revealed its latest subscriber counts for its WWE Network on Monday afternoon. The company reported 1.95 million subscribers, a 7 percent increase from April 2016. The company says 1.66 million are paid subscriptions.

WWE abandoned its pay-per-view model three years ago and launched the WWE Network, where it broadcasts its signature events and original programming to monthly subscribers, who also have access to the company’s archived shows.

Citi estimates WWE needs 1.76 million paid subscribers to replace the revenue the company lost when it abandoned its pay-per-view model.

“Results today demonstrate that we are effectively executing our multi-platform content strategy,” WWE CEO Vince McMahon said in a statement. “WWE Network continues to drive transformative growth for our company and is a key element of our global content ecosystem, which includes traditional television, digital and social platforms and our direct-to-consumer service.”

WWE shares plunged more than 7 percent in a matter of seconds on Monday afternoon after the subscriber count was announced. The stock quickly recovered much of its initial losses, but still finished Monday’s session down more than 1.6 percent on the day.

Traders were likely reacting to the fact that the 1.95 million number fell short of management’s reported internal subscriber goal of 2 million.

WWE has aggressively been running free subscription promotions targeting new users and former subscribers who dropped their subscriptions. Paid subscribers are up 14 percent from April of last year.

Citi analyst Jason Bazinet reiterated a “buy” rating on WWE stock last week and said the company’s decision to invest heavily in the WWE Network was the right call for shareholders in the long run.

“Three years ago, WWE made a smart strategic pivot by migrating from a pay-per-view model to a web-based subscription model,” Bazinet said.

Since the WWE Network launched in early 2014, the company has provided updated subscriber counts on the day after its largest event of the year, WrestleMania. This year’s WrestleMania took…

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