World Wrestling Federation Entertainment Inc.'s
initial public offering blazed out of the gate last Tuesday, opening at $32 per share, or
nearly double its expected offering price.
The WWF priced its 10 million-share IPO at $17 per share,
expecting to raise $170 million. Although that was higher than the previously expected
range of $14 to $16 per share, investors proved hungry for the stock.
The NASDAQ-traded shares, trading under the WWFE symbol,
climbed as high as $35 before falling back to $24.13 the first afternoon, closing at
$25.25.
Later, the buzz wore off. WWFE's share price dropped
to $23.94 last Wednesday and fell to $21.50 by Thursday's close.
"Certainly there's a definite faddish
element," Cantor Fitzgerald chief market analyst Bill Meehan said. "That's
the No. 1 driving force behind a lot of IPOs. There is some faddishness here and certainly
a legitimate question about how far this can go."
The company said it plans to use the $158 million net
proceeds for general purposes. The underwriters have 30 days to exercise options on 1.5
million shares for overallotments, so the WWF could pocket another $25.5 million.
The company sold about 15 percent of equity to the public,
but chairman Vince McMahon retains control with 98 percent of voting shares. McMahon
entered the squared circle of domestic billionaires, as his holding was worth more than
$1.4 billion.
Unlike some hot IPOs, the WWF makes money. Between its
cable, broadcast and pay-per-view fare, as well as its merchandising blitz and other
licensing deals, the WWF nearly doubled its revenue in fiscal 1999 (ended April 30) to
$251.5 million from $126.2 million in fiscal 1998. Cash flow rose to $59.3 million from
$12.1 million a year earlier, and net income spiked to $56 million from $8.5 million.
Through three months ended June 30, the WWF's revenue
doubled to $76.2 million from $39 million a year earlier, and net income rose to $20.3
million from $5.1 million.
