World Wrestling Entertainment shares fell more than 23% in after-hours trading Thursday after the company revealed that its co-presidents George Barrios and Michelle Wilson have resigned, effective immediately.
In a press release WWE chairman and CEO Vince McMahon thanked Barrios and Wilson for their contributions, but added that he and the pair did not see eye to eye on the company’s future direction. The news sent shockwaves through the market, as WWE shares dropped as low as $47.95 each in after-hours trading, down 23% or $14.35 per share.
“I am grateful for all that was accomplished during their tenure, but the Board and I decided a change was necessary as we have different views on how best to achieve our strategic priorities moving forward," McMahon said in a press release.
Frank A. Riddick III, who has been a board member for 11 years, has been named interim chief financial officer, reporting to McMahon. The company said it has started a search for a permanent CFO and chief revenue officer.
Barrios is well-respected on Wall Street and joined WWE as CFO in 2008 and has served as co-president since February 2018 and was chief strategy and financial officer from 2013. Prior to WWE, Barrios had served as vice president and treasurer and CFO of the New York Times Co.
Wilson, who was named co-president in 2018, joined WWE in 2009 as chief marketing officer and became chief revenue & marketing officer in 2013. Prior to her tenure at WWE, she was CMO at the United States Tennis Association and from 2000 to 2001b was vice president of marketing for the XFL, WWE’s former professional football league.
The news comes as WWE prepares to announce its Q4 results next week. In a press release, WWE said it remains well positioned for growth and expects full year 2019 cash flow to be about $180 million.
“We have a deep team of talented, experienced and committed executives across the organization, and the board and I have great confidence in our collective abilities to create compelling content, engage our global fanbase across platforms, increase revenues, and drive shareholder value,” McMahon said.
In a research note Evercore ISI media analyst John Belton cited the abruptness of the announcement — a week before earnings and a month before a planned investor meeting — as a concern, and downgraded the stock to “in-line,” lowering his 12-month price target in the stock from $80 to $50.
“These developments will clearly cause weakness in WWE shares for a variety of reasons," Belton wrote, adding that the timing could suggest that “2020 adjusted OIBDA expectations must be further cut, particularly given updated 2019 guidance now targeting the low end of the prior range. Second, to the extent that the disagreements between McMahon and Barrios / Wilson centered on reinvestment and / or capital allocation policies, hopes for more shareholder-friendly initiatives moving forward could be diminished. Third, the abrupt nature of the release suggests a tumultuous situation at the company which makes it difficult to gain confidence in forecasting the near- and long- term financial outlook."