Is TKO Outperforming the Communication Service Sector?

With a market cap of $34.6 billion, TKO Group Holdings, Inc. (TKO) is a sports and entertainment conglomerate formed through the merger of WWE and UFC under Endeavor Group Holdings. As a subsidiary of Endeavor, TKO oversees premier combat sports brands and generates revenue through live events, streaming via UFC Fight Pass, merchandise, sponsorships, and a broad range of licensed media content across digital and linear platforms.

Companies valued at $10 billion or more are generally classified as “large-cap” stocks, and TKO Group fits this criterion perfectly. As of 2024, TKO owns the world’s most valuable MMA and pro wrestling organizations and has expanded further by acquiring IMG, On Location Events, Professional Bull Riders, and Mexico’s Lucha Libre AAA Worldwide.

Shares of the New York-based company have declined 2.3% from its 52-week high of $179.09. TKO stock has gained 13.2% over the past three months, outperforming the Communication Services Select Sector SPDR ETF Fund's (XLC) 5.3% rise during the same period.

In the longer term, WWE, UFC Parent's shares have increased 23.1% on a YTD basis, exceeding XLC's 8.7% gain. Over the past 52 weeks, TKO stock has climbed 63.3%, compared to XLC's 22.4% return over the same period.

The stock has been trading mostly above its 50-day and 200-day moving averages since last year.

TKO Group reported Q1 2025 results on May 8. The company reported revenue of $1.3 billion and net income of $165.5 million, a sharp turnaround from a $234.5 million loss the prior year. Adjusted EBITDA jumped 23% to $417.4 million, driven by growth at both WWE and UFC, and the company raised its full-year guidance. Investors also reacted positively to the inclusion of recently acquired IMG, On Location, and PBR businesses, which pushed projected 2025 revenue up to as much as $4.6 billion. However, shares of TKO fell 5.5% the next day.

In comparison, rival The Walt Disney Company (DIS) has lagged behind TKO stock. DIS stock has soared 7.3% on a YTD basis and 16.9% over the past 52 weeks.