World Wrestling Entertainment, Inc. WWE 0.35% closed down 3.8 percent Wednesday and continued marginally lower in after-hours trading after CEO Vince McMahon reported a significant divestment.
McMahon sold more than 3.2 million shares — about 4.1 percent of WWE’s outstanding shares — in a block trade in order to bolster his other fledgling venture.
“Mr. McMahon executed the sale primarily to fund a separate entity from the Company, Alpha Entertainment LLC, which Mr. McMahon established to explore investment opportunities across the sports and entertainment landscapes, including launching a professional football league under the name ‘XFL,’” according to his 8-K filing.
This is the second time McMahon drew from his holdings to fund Alpha Entertainment, a wholly distinct entity from the WWE.
Why It’s Important
By the market’s reaction, WWE investors appeared to interpret the sale to portend more disruptive imminent changes. McMahon assured the company he has no intention to sell additional shares, and he plans to remain CEO and chairman “for the foreseeable future.”
With nearly 28.7 million shares still in hand, McMahon continues to hold 80.1 percent of WWE’s voting power and 36.8 percent of total outstanding shares.
The XFL is scheduled to launch in early 2020 with teams in Dallas, St. Louis, Houston, Los Angeles, New York, Seattle, Tampa Bay and Washington, D.C.
WWE’s stock closed Wednesday’s session at $84.87 per share. The stock is up 134 percent over the past year.
World Wrestling Entertainment Inc. shares were trading at $84.54 per share on Thursday morning, down $0.33 (-0.39%). Year-to-date, WWE has gained 13.30%, versus a 12.50% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Benzinga.