Key points
- Endeavor owns 51% of TKO Group, which operates the two major fighting and sports entertainment organizations: UFC and WWE.
- WrestleMania 40 broke attendance, merchandise, viewership and social media records.
- Endeavor agreed to allow Silver Lake Management to acquire the company, but TKO Group will remain an independent public company.
- 5 stocks we like best from TKO Group
TKO Group Holdings Inc. NYSE: TKO is a sports and entertainment company formed by the merger of World Wrestling Entertainment New York Stock Exchange: WWE and Zuffa, the parent company of the Ultimate Fighting Championships (UFC). TKO Group is a subsidiary of Endeavor Group Holdings Inc. New York Stock Exchange: EDR.
The consumer discretionary company has combined the two most dominant entertainment organizations in mixed martial arts (MMA) and professional wrestling. WWE hosted its annual WrestleMania 40 for two nights starting April 6, 2024 and shattered its previous record as the most successful event in its history.
WrestleMania: The Super Bowl of professional wrestling
Like the Super Bowl held at the end of every NFL football season, WrestleMania was created as an annual event featuring WWE’s top stars. Alleged scandals that have come to light surrounding WWE founder Vince McMahon have investors wondering whether bad publicity would ruin the event.
However, the concerns were unfounded as WrestleMania 40 broke many records. WWE brought back previous top stars, including Dwayne “The Rock” Johnson, and introduced second-generation professional wrestler, Cody Rhoades, who won the Heavyweight Championship from Roman Reigns on the second night of main event on April 7, 2024.
Daily mug template
The daily candlestick chart on TKO illustrates a cup pattern. The cup lip line formed at $102.04 on September 21, 2024. TKO proceeded to sell to a low of $72.33 by December 11, 2023. The shares managed to form a rounded bottom and to move back up towards the cup line, reaching $99.40 as the daily relative strength index (RSI) fluctuates to the 80 band. Pullback support levels are at $93.49, $88.58, 82.47 $ and $79.14.
Breaking so many records
WrestleMania 40 broke many records. It broke its previous attendance record with 145,298 attendees during the two-night event. Viewership increased 41% year-over-year, driving merchandise sales 20% year-over-year to new record levels. WrestleMania debuted its first ring mat sponsorship with PRIME Hydration. Its fan event was also the highest-attended and highest-grossing fan event in history. There were over 660 million views and over 67 million views on WWE’s YouTube channel in 24 hours.
The Monday Night RAW event following WrestleMania also opened the biggest gate in history as the post-WrestleMania storylines continued into the episode. The NXT Stand & Deliver event was the highest-attended event in NXT history, with 16,545 attendees.
Acquisition effort
In 2016, Endeavor acquired the UFC for $4 billion. In 2023, Endeavor spun off the UFC to merge with WWE in a $21 billion deal to form the TKO Group, with Endeavor retaining 51% ownership of TKO. On April 2, 2024, Endeavor agreed to be acquired by private equity firm Silver Lake Management for $13 billion.
Silver Lake already held a 71% stake in Endeavor, and under the deal, Silver Lake will acquire the remaining shares for $27.50 in cash per share. TKO Group will remain an independent, publicly traded company. The deal is expected to close by the first quarter of 2025.
Endeavor CEO Ari Emanuel said: “We believe this transaction will maximize value for all of Endeavor’s public shareholders and we are excited to continue to unlock and invest in future growth opportunities as a private company.”
A much-needed shot in the arm?
After a disappointing fourth quarter of 2023, the great success of WrestleMania could be a nice breath of fresh air for TKO Group. On February 27, 2024, the company reported a loss of 16 cents for the fourth quarter of 2023. Revenue increased 126% year-over-year to $614 million, but still fell short of consensus estimates of $623.29 million of dollars. The company also issued a lower forecast for full-year 2024 for revenue of $2.575 billion to $2.650 billion versus consensus analyst estimates of $2.79 billion.
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Contributing author
Trading strategies
Experience
Jea Yu has been collaborating with MarketBeat since 2018.
Areas of expertise
Stocks, options, ETFs and futures; fundamental, qualitative, quantitative and technical analysis and pattern identification; active and swing trading; trading systems and methodology development
Education
Bachelor of Arts, University of Maryland, College Park
Past experience
Trader, writer and analyst of US stock markets for over 25 years. He has published four books for publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. He speaks at various exhibitions and seminars and has been quoted and featured in USA Today, The Wall Street Journal, Traders Magazine, The Financial Times and various trading publications, including Stocks & Commodities, Active Trader and Online Investor.