Hulk Hogan Controversy Costs WWE $50 Million

World Wresting Entertainment was on a roll.

On July 8, Wells Fargo WFC -0.74% initiated coverage of WWE with an outperform recommendation. Shares of the entertainment company increased 14% the two-week period through Wednesday, making shareholders $160 million richer.

But after it was reported that WWE was going to sever its ties with former WWE champion Hulk Hogan due to alleged racist remarks he had made long ago that were leaked to the National Inquirer two days ago, the company’s shares have tanked. Although no longer pinning opponents in the ring, Hogan was still an important ambassador for the WWE brand and was used to promote events.

Yesterday, shares of WWE plummeted almost 4%, to $16.60, swiping about $50 million from shareholders. Meanwhile, the overall market, and shares of MSG (perhaps the closest public proxy to WWE), the company that owns regional sports networks as well as the NBA’s New York Knicks and the NHL’s New York Rangers, slipped just 1%.

Hogan, whose real name is Terry Bollea, is set to go to trial in a $100 million personal-injury lawsuit against Gawker Media, which posted video of a sex tape of him. Yesterday, Hogan apologized for his remarks, but WWE’s shares fell further in after hours trading last night to $16.00.

source: forbes.com