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There's a strong chance shares of WWE stock will fall on Monday (April 3), and we've found a way for savvy investors to take advantage of this trend for a potential 88% profit…
Sunday night is WrestleMania, the biggest event of the year for World Wrestling Entertainment Inc. (NYSE: WWE). And that's an understatement. But with WrestleMania being both the creative and financial peak of WWE's year, traders are ready to exit once it ends.
Last year, more than 100,000 fans piled into AT&T Stadium in Dallas, Texas, to watch the event live, while more than 1.8 million people watched at home. Last year's event grossed an eye-popping $17 million.
WrestleMania Is a Massive Spectacle
The WWE's streaming service that hosts the event is nearly as lucrative. The WWE Network is the only way to watch the event outside of showing up at the stadium. That means for fans to tune in, they have to pay the $9.99 per month fee to get access to the WWE Network. With an average of 1.52 million subscribers before WrestleMania last year, that amounts to $15 million in subscriptions.
And traders respond to the money-making potential of WrestleMania every single year, causing a predictable shift throughout WWE stock history. That's why we're going to show you a simple strategy to make big profits from this WWE stock trend…
The WWE Stock Trend to Follow This Week
That's because traders anticipate the company's growth during the run-up to the WWE's biggest event of the year. And they cash out when it's over.
Last year, WWE reported a record $199 million in revenue for Q2, with 19% of its revenue growth that quarter due to WrestleMania. And WWE grew its average subscribers by 39% in the first quarter and hit a record-high average of 1.52 million paid subscribers in Q2.
Viewers interested in WrestleMania subscribe to the streaming service early to watch the build-up to the event. WWE Network viewers watched 21.7 million hours of shows on the network in the week leading up to WrestleMania in 2016. That was a 45% increase from 2015.
But the viewer and revenue numbers fell after WrestleMania. Revenue fell $35 million between Q2 and Q3 2016, while average paid subscribers to the WWE Network dropped to 1.41 million by Q4.
And traders know WWE's numbers will fall as the year goes on. That's why they cash out the day after WrestleMania. Check out the huge jump in trading volume on the day after WrestleMania over the past three years.
In 2014, WWE stock dropped 20% the day after WrestleMania. That decrease was 17% the day after the 2015 WrestleMania, and 8% the day after the 2016 WrestleMania.
Those are huge one-day price collapses, and they happen on the same day every year.
While you're right to notice that those day-after WrestleMania drops are getting smaller each year, that trend is likely to reverse this year.
WWE stock is already up 22.28% on the year. Shares of WWE trade at $22.50, their highest price since the network was launched in 2014. The stock is already at Wall Street analysts' average price target for 2017 of $23. And some Wall Street analysts expect to see the share price fall to $16 a share. That's not surprising since its average 2016 share price was $18.
So WWE stock is already highly priced thanks to traders bidding the stock up ahead of WrestleMania. And that means it has more room to correct on Monday.
Here's how to play this trend and maximize your profits…