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Here's Why World Wrestling Entertainment (WWE) Stock Is Soaring

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Shares of World Wrestling Entertainment (WWE - Free Report) moved sharply higher in morning trading Wednesday after the company inked larger-than-expected TV licensing deals for its flagship weekly shows.

WWE signed new agreements with Comcast’s (CMCSA - Free Report) USA Network and 21st Century Fox’s (FOXA - Free Report) Fox Sports, which will both become effective on Oct. 1, 2019. USA Network will continue to distribute “Raw” as it has for several years, while “SmackDown” will move to Friday nights on Fox.

Both deals are five-year agreements. Together, they will increase the average annual value of WWE’s domestic TV distribution to more than 3.5x that of its current deal with Comcast’s NBC Universal.

WWE said it expects revenue from the deals to increase from $311 million in 2019 to $462 million in 2021. That would mark growth of roughly 48.5% over that two-year stretch.

Investor reaction to the deal underscores the importance of TV distribution for WWE—even as the sports entertainment company continues to push its own over-the-top streaming service. WWE Network, which features live main events like “Wrestlemania” as well as unique original content, currently boasts about 1.6 million average paid subscribers.

“Raw” and “SmackDown” are weekly shows which create and advance storylines between wrestling characters in the run up to main events. “Raw” has been on air for two-and-a-half decades and is the longest-running weekly episodic TV show in American primetime history.

WWE shares opened higher and quickly touched an intraday peak of $74.72—about 12.2% above Tuesday’s close. The stock has since fallen from that high, but WWE is still on pace to book a solid gain today.

Wednesday’s trading adds to WWE’s solid momentum. The company has seen share prices more than double so far this year as investors have gobbled up rumors related to its now-official TV deals.

The sports entertainment brand has also been busy expanding its live event empire. WWE hosted a massive, 60,000-person show in Saudi Arabia this April through a special agreement with the Saudi government, and it plans to hold another seismic event at Australia’s famous Melbourne Cricket Ground later this year.

Analysts have also become more bullish on WWE’s earnings outlook recently, with our consensus projection for its full-year EPS figures moving eight cents higher over the past two months. WWE is now expected to report earnings growth of 41.5% in fiscal 2018.

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