Class Action Suits Against WWE Becoming Less Likely As Stock Price Stabilizes

WWE found itself facing the potential for several class-action lawsuits in the wake of the Vince McMahon hush-money scandal. Several law firms started searching for WWE shareholders who had lost money due to the news. WWE’s stock took a huge dip in the immediate aftermath, but its price has since started to stabilize.

At one point, the company lost $600 million in market value. The firms who were pursuing the lawsuits were hoping to try and recover some of those losses using the strategy that WWE failed to disclose key information that would result in the stock’s value dropping. Since then, the picture has changed dramatically.

In this week’s Wrestling Observer Newsletter, Dave Meltzer discussed how the potential for lawsuits might have changed. WWE’s stock closed at $65.07 per share on July 7. While its value is still down $130 million, the recovery has made class-action lawsuits over the stock much less likely to occur.

“The WWE stock had a good week, so the losses from the Vince scandal have bounced back most of the way. It closed at $65.07 per share on 7/7,giving the company a $4.872 billion market value. It’s still down about $130 million from when the story broke, but that is greatly beneficial because when it was down almost $600 million there were law firms looking at class action suits. As it gets closer to the old price, the idea of suits in that direction are far less likely.”

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At one point, as many as eight law firms were looking into the WWE stock price situation. As it stands, it would be very difficult to say that the McMahon situation was enough to merit a class action suit. WWE has very stable and predictable revenue sources, making it a safe bet for investors. It looks like the hit share prices took from bad publicity may have only been temporary.

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