High-Flying Profits in the 'Attention Economy'
Anyone who says the stock market is boring hasn't studied TKO Group (TKO).
This is a nontraditional company to say the least...
TKO doesn't really fit the mold of any one industry. It owns mega sporting brands like World Wrestling Entertainment ("WWE"), Ultimate Fighting Championship ("UFC"), and Professional Bull Riders ("PBR").
And it owns IMG, a sports-marketing agency that specializes in talent management, brand licensing, media rights and production, and operating live events.
It also owns On Location, an experiential hospitality and travel company.
So it has its hands in a lot of different industries and markets.
It doesn't have many comparables, or "comps" as us analysts like to say.
But it's a perfect example of why stock markets can be so fun. If you want to learn about the economics of wrestling, you can. You can see exactly how that business works through TKO's public earnings. (Spoiler: It works very well.)
As a whole, TKO has been extremely enriching to shareholders.
Over the past decade, the stock has posted a return of around 30% a year. At that rate, investors have compounded their money 10-fold...
As TKO has grown from just a wrestling company to a diversified entertainment powerhouse, shareholders have realized that the profits its business model generates are massive.
In 2025, TKO generated $1.2 billion in free cash flow on roughly $4.7 billion in revenue. And analysts expect sales to grow 21% over the next year.
It's all thanks to TKO's control of a highly valuable commodity... attention.
These days, it feels like we're inundated with countless companies all competing for our attention. It has become extremely valuable to own an audience. That's what has led to the rise of professional influencers and jacked up ticket prices at sporting events.
And it's how web properties like Google Search and Facebook have built trillion-dollar businesses.
The "attention economy" is extremely effective at turning your time and focus into money. TKO just happens to do it with blood and backflips...
Three Big Ideas About TKO
Trophy Assets in a World Starving for Content
In the age of streaming, the most valuable content isn't the latest prestige drama. It's the thing people watch live.
That's the bet Netflix made when it signed a 10-year deal to house WWE's TV show Raw... and why Paramount Plus pays UFC more than $1 billion per year for streaming rights.
Live events with a fanbase have pricing power because they can't be replaced. You can't rewatch a title fight once the result is spoiled for you on social media. That urgency makes live content rare, "must watch" viewing and commands attention from advertisers.
TKO owns two of the most powerful live franchises on the planet. WWE runs 52 weeks a year with weekly shows and pay-per-view events. And UFC operates for about 40 to 45 weeks a year with "real" fights.
These are trophy assets. They're the Disney World of live entertainment – impossible to recreate, difficult to compete with, and increasingly expensive to access.
The 'Kayfabe' Multiplier: Deep Fandom Is More Valuable
When Logan Paul signed with WWE in 2022, he wasn't just a celebrity cameo.
He became a character – a "heel," a villain the audience loved to hate. And he brought his beverage brand Prime with him. The bottle became part of his ring entrance. Night after night, in front of millions of viewers, Prime wasn't an ad break. It was part of the show.
This is what WWE calls "kayfabe" – the blurring of wrestling reality and real-world reality. Think of guys like Dwayne "The Rock" Johnson, Hulk Hogan, and John Cena. All of them maintained their persona throughout their wrestling careers.
It gives the illusion that the show is genuine... And it tends to compound the value of marketed products and sponsorship deals. Paul's Prime, for instance, hit $1.2 billion in sales the year after it launched.
Kayfabe storylines can also be self-healing. If true fans don't like the latest match, star, or storyline, they go online to complain about it. It boosts engagement and strengthens fandom, rather than weakening it.
The multilevel storytelling of WWE is something fans simply can't get anywhere else.
The White House Lawn, Boxing, and TKO's Playbook
UFC is about to hold a fight card on the White House lawn called Freedom 250. It's set for June 14, in honor of President Donald Trump's birthday and America's 250th year of independence. And it'll involve a series of mixed martial arts cage fights.
TKO expects to lose about $60 million on the event, though it will recoup roughly half that through sponsorships.
That sounds like a bad deal – until you understand TKO's playbook.
The company has always traded short-term losses for long-term audience growth. For example, UFC CEO Dana White's original breakthrough was The Ultimate Fighter on Spike TV, a reality show that transformed UFC from a banned spectacle into a mainstream sport. It wasn't profitable at first. But eventually, it flooded the company with enough cash and attention to consolidate the entire mixed martial arts industry.
The White House event follows the same logic. And the connection between Trump and UFC goes back decades... Trump's casinos were among the first venues to host UFC when no one else would touch it.
When it comes to Freedom 250, the value isn't in ticket revenue or sponsors. It's the global viewership.
UFC's strategy is simple: Get someone to watch one fight... and see how many new fans show up the following week.
Watch to Learn More
To learn more, check out my discussion with True Wealth's Sean Michael Cummings in this week's Top Stocks episode. Sean's specialty is finding offbeat stories that lead to real stock moves. We talk about the history of TKO, the wild stories from the wrestling world, UFC's place in the sports landscape, and what's ahead for TKO...
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
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Straight to the Source
- A good biography about TKO cofounder Vince McMahon: Ringmaster: Vince McMahon and the Unmaking of America
- TKO's most recent investor presentation
- The full UFC Freedom 250 press conference
Until next week,
Matt Weinschenk
Publisher and Director of Research
What do you think about Top Stocks? Send any and all feedback to thisweek@stansberryresearch.com. We read every e-mail you send in.