Stocks got the week started on the right foot on the heels of decent consumer spending and income levels for February, sending the S&P 500 up 1.2% to close of 2,086.
It wasn’t a bullish session for every stock, though. BlackBerry Ltd (NASDAQ:BBRY), Altera Corporation (NASDAQ:ALTR) and World Wrestling Entertainment, Inc. (NYSE:WWE) all lost a good deal of ground spurred by a wave of new pessimism.
World Wrestling Entertainment (WWE)
Wrestling fans of World Wrestling Entertainment — affectionately referred to as just ‘WWE’ by most –– may be more rabid than ever about the sport, but some observers are understandably concerned the company may be on the verge of running into a Hulk-Hogan-sized headwind.
It’s admittedly a mixed message. This weekend’s WrestleMania event (its 31st annual mega-event, for those keeping track) was the most-attended and highest-grossing live event ever promoted by World Wrestling Entertainment.
Unfortunately, investors were disappointed by the growth prospects WWE seems to have with its new subscription-based TV channel model.
As of yesterday’s WrestleMania 31 event, the WWE pay-channel boasted 1.3 million subscribers. However, the company suggested that figure could fall rather than consistently grow in the future, as some subscribers may simply sign up for the service long enough to view big events, and then cancel their service afterwards. In fact, many of those subscribers were only brought into the fold because of a strong, give-away promotion.
All told, WWE shares fell nearly 15% on Monday.
After Wall Street took a full weekend to digest BlackBerry’s Friday morning Q4 earnings results, investors and observers decided last quarter’s “success” still wasn’t enough to justify owning the stock. The net result was a near-7% loss from BBRY stock for the day, a move that took the stock to new multi-week lows.
Of course, it wasn’t as if the stock didn’t have help moving lower from some key investment banks. JP Morgan is now concerned that the aggressive cost-cutting measures BlackBerry is taking will ultimately crimp its ability to drive sales and profits. Meanwhile, Deutsche Bank released some alarming thoughts on BBRY on Sunday, calling into question the company’s ability to ever justify a higher stock price.
Reality trumped rumor today, sending shares of semiconductor maker Altera down more than 3% as a result.
Friday’s whisper suggested rival chip company Intel Corporation (NASDAQ:INTC) was interested in acquiring the smaller Altera, sparking a 29% jump from ALTR that day. The buzz is already fading though, on the heels of a downgrade of Altera from investment bank Morgan Stanley. The Morgan Stanley analyst commented:
“Altera traded to $44.39; this is over 20% above our previous price target, and reflects a value of 26.5X 2015e EPS and 23.3X 2016e… Net of cash, the multiples are 20.6X 2015e and 18.1X 2016e.”
At that valuation, there’s little room left for price appreciation from ALTR should Intel decide against an acquisition.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.