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Sphere Entertainment (SPHR)
NYSE:SPHR
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Sphere Entertainment
(NYSE:SPHR)
Rating:58Neutral
Price Target:
$37.00
▲(0.00%Upside)
Positive Factors
Debt Reduction
Sphere announced an agreement with the MSG Networks term loan lending group to reduce the outstanding loan from over $800mm to $210mm.
Market Opportunity
The market is currently under-appreciating the opportunity for the Las Vegas Sphere to continue to reinvent itself with new content and improve execution to grow Revenue and AOI.
Revenue Growth
Raising Sphere experiences and residency revenues with a more optimistic assumption around the upcoming Wizard of Oz and higher residency count.
Negative Factors
Content Production Challenges
The Sphere Experience content is prohibitively expensive to produce, with only one or two shows developed per year, limiting monetization.
Financial Risk
Every core component of the Sphere platform relies on the Las Vegas ecosystem, and attempting to expand beyond it only magnifies the flaws and increases financial risk.
Valuation Concerns
The NPV of cash flows for MSG Networks is lower than the net debt, leading to a valuation of $0 in base and bull cases.
Sphere Entertainment (SPHR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.37B
Dividend YieldN/A
Average Volume (3M)891.62K
Price to Earnings (P/E)―
Beta (1Y)1.71
Revenue Growth-5.04%
EPS Growth-155.66%
CountryUS
Employees1,080
SectorCommunication Services
Sector Strength83
IndustryEntertainment
Share Statistics
EPS (TTM)-2.27
Shares Outstanding29,132,664
10 Day Avg. Volume568,053
30 Day Avg. Volume891,620
Financial Highlights & Ratios
PEG Ratio-0.05
Price to Book (P/B)0.54
Price to Sales (P/S)0.00
P/FCF Ratio33.84
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$45.56Price Target Upside23.14% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Sphere Entertainment Business Overview & Revenue Model
Company DescriptionSphere Entertainment Co. engages in the entertainment business. It produces, presents, or hosts various live entertainment events, including concerts, family shows, and special events, as well as sporting events, such as professional boxing, college basketball and hockey, professional bull riding, mixed martial arts, and esports and wrestling in its venues, including The Garden, Hulu Theater, Radio City Music Hall, and the Beacon Theatre in New York City; and The Chicago Theatre. The company also operates 70 entertainment dining and nightlife venues spanning 20 markets across five continents under the Tao, Marquee, Lavo, Beauty & Essex, Cathédrale, Hakkasan, and Omnia brand names; and creates and operates New England's premier music festival. In addition, it features the Radio City Rockettes, which serves as the star for its Christmas Spectacular at Radio City Music Hall. The company was formerly known as Madison Square Garden Entertainment Corp. and changed its name to Sphere Entertainment Co. in April 2023. Sphere Entertainment Co. was founded in 2006 and is based in New York, New York.
How the Company Makes MoneySphere Entertainment Co. generates revenue primarily through ticket sales for its immersive events and live performances held at its venues. The company also earns income from partnerships and sponsorships with brands seeking to associate with its unique entertainment offerings. Additionally, Sphere Entertainment capitalizes on merchandising opportunities, selling branded products and memorabilia to enhance the customer experience. The company's strategic partnerships with artists, production companies, and technology providers further expand its revenue potential by enabling a diverse range of shows and spectacles. Venue bookings for private events and collaborations with other entertainment entities also contribute to its income.
Sphere Entertainment Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q2-2025)
| % Change Since: 27.63%|
Next Earnings Date:Aug 15, 2025
Earnings Call Sentiment Neutral
The earnings call highlights strong revenue performance and growth in the Sphere segment, successful concert residencies, and robust sponsorship demand. However, there are challenges with MSG Networks' declining revenue and subscriber base, a significant goodwill impairment charge, and an operating loss in the Sphere segment. Despite these challenges, the company's strong liquidity position and strategic initiatives suggest a positive outlook.Q2-2025 Updates
Positive Updates
Total Revenue and Adjusted Operating Income
Sphere Entertainment Company generated total revenues of $308.3 million and adjusted operating income of $32.9 million for the December quarter.
Sphere Segment Revenue Growth
Sphere segment generated $169 million in revenue, with $87 million from Sphere experience across 190 shows in the December quarter, showing strong performance.
Successful Concert Residencies
Kenny Chesney and Backstreet Boys announced for 15 and 18-show residencies, respectively, highlighting strong interest from artists.
Strong Sponsorship and Advertising Demand
Solid advertising demand for the Exosphere at the end of 2024 continues into the new year, indicating robust sponsorship interest.
Cash and Liquidity Position
Company holds $502 million in unrestricted cash and cash equivalents, with $400 million at the Sphere segment, indicating a strong liquidity position.
Negative Updates
MSG Networks Revenue Decline
Revenue decreased to $139.3 million in the December quarter from $146.4 million in the prior year, driven by an approximately 11.5% decrease in subscribers.
Noncash Goodwill Impairment Charge
A $61.2 million noncash goodwill impairment charge was recorded due to ongoing industry challenges facing MSG Networks.
Adjusted Operating Loss in Sphere Segment
Sphere segment reported an adjusted operating loss of $800,000 for the December quarter, reflecting challenges in achieving profitability.
Content Production Costs for Residencies
High content production costs for bands remain a concern, although offset by residency benefits.
Company Guidance
During the Sphere Entertainment Company's earnings call for the fiscal period ending December 31, 2024, the company provided guidance focused on driving profitable growth through several strategic initiatives. Jim Dolan, the Executive Chairman and CEO, highlighted the development of new productions to expand their original content library and the promotion of concert residencies, including upcoming shows by Kenny Chesney and the Backstreet Boys. The company reported total revenues of $308.3 million and an adjusted operating income of $32.9 million for the December quarter. The Sphere segment alone generated $169 million in revenue, though it reported an adjusted operating loss of $800,000. The Sphere experience in Las Vegas has generated over $450 million in high-margin revenue, indicating strong demand and successful pricing strategies. Robert Langer, the new EVP and CFO, mentioned that the company is optimistic about revenue growth and cost efficiencies for the upcoming year, aiming to improve adjusted operating income significantly. The call also touched on expansion plans, with ongoing work on a second Sphere in Abu Dhabi and potential designs for smaller Spheres in other markets. The company ended the year with approximately $502 million in unrestricted cash and cash equivalents, and a debt balance of about $1.36 billion.Sphere Entertainment Financial Statement Overview
Summary
Sphere Entertainment faces financial challenges with inconsistent revenue growth and profitability pressures. The balance sheet reveals manageable leverage but declining equity stability. Cash flow management shows some improvement, indicating potential for operational stabilization. Overall, the company needs to focus on enhancing profitability and managing its capital structure to ensure financial health.Income Statement
Sphere Entertainment's revenue growth is inconsistent, with a recent revenue decline compared to earlier years. The company has struggled with profitability, as indicated by negative EBIT and net income margins in TTM, reflecting operational challenges. Gross profit is positive but insufficient to cover operating expenses, leading to negative net profits.55
Neutral
Balance Sheet
Sphere Entertainment maintains a moderate debt-to-equity ratio, indicating manageable leverage, but has a declining equity ratio, suggesting increased liabilities relative to assets. Despite a stable asset base, the reduction in stockholders' equity over time is a concern. ROE is negative, highlighting profitability challenges.60
Neutral
Cash Flow
The cash flow situation is mixed, with recent positive free cash flow but volatile operating cash flows over different periods. The free cash flow to net income ratio is concerning due to persistent net losses. However, improvements in operating cash flow in the TTM suggest potential stabilization.50
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.13B | 1.03B | 573.83M | 610.05M | 647.51M | 1.44B | Gross Profit |
| 385.77M | 479.06M | 231.62M | 289.78M | 384.65M | 645.52M | EBIT |
| -337.83M | -341.24M | -273.04M | -165.74M | 64.51M | 235.21M | EBITDA |
| -462.20M | -3.44M | 405.62M | -16.38M | 193.75M | 210.04M | Net Income Common Stockholders |
| -325.06M | -200.65M | 502.77M | -194.40M | -148.15M | 181.73M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 241.07M | 559.76M | 131.97M | 747.31M | 1.52B | 1.24B | Total Assets |
| 3.08B | 4.79B | 4.97B | 5.52B | 5.29B | 3.73B | Total Debt |
| 0.00 | 1.52B | 1.32B | 1.09B | 2.01B | 261.16M | Net Debt |
| -241.07M | 958.99M | 1.19B | 339.19M | 494.59M | -645.39M | Total Liabilities |
| 675.41M | 2.37B | 2.39B | 3.36B | 2.97B | 844.77M | Stockholders Equity |
| 1.71B | 2.42B | 2.58B | 1.96B | 2.17B | 2.86B |
| Cash Flow | Free Cash Flow | ||||
| 35.18M | -309.41M | -905.39M | -615.38M | -514.70M | -149.18M | Operating Cash Flow |
| 69.41M | -19.66M | 153.59M | 141.34M | -58.69M | 308.12M | Investing Cash Flow |
| -106.31M | -45.18M | -653.92M | -804.16M | -123.18M | -394.53M | Financing Cash Flow |
| -74.17M | 209.73M | 85.54M | -30.39M | 592.68M | -113.87M |
Sphere Entertainment Technical Analysis
Neutral
37.00
Price Trends
31.98
Positive
36.51
Positive
39.56
Negative
Market Momentum
1.64
Positive
59.13
Neutral
52.54
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPHR, the sentiment is Neutral. The current price of 37 is below the 20-day moving average (MA) of 37.17, above the 50-day MA of 31.98, and below the 200-day MA of 39.56, indicating a neutral trend. The MACD of 1.64 indicates Positive momentum. The RSI at 59.13 is Neutral, neither overbought nor oversold. The STOCH value of 52.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPHR.
Sphere Entertainment Risk Analysis
Sphere Entertainment disclosed 57 risk factors in its most recent earnings report. Sphere Entertainment reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Material impairments in the value of our long-lived assets and goodwill could negatively affect our business and results of operations. Q3, 2024
Sphere Entertainment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $3.72B | 21.33 | 71.46% | 0.51% | -0.80% | 13.07% | |
74 Outperform | $1.50B | 59.81 | 9.00% | ― | -1.98% | -1.18% | |
66 Neutral | $749.27M | 17.04 | 29.37% | ― | -3.30% | -48.76% | |
63 Neutral | $1.76B | 13.64 | 1222.83% | ― | 5.81% | 133.05% | |
61 Neutral | $14.20B | 5.93 | -4.31% | 3.70% | 2.75% | -35.73% | |
58 Neutral | $1.37B | ― | -15.64% | ― | -5.04% | -155.66% | |
49 Neutral | $1.44B | ― | 20.03% | ― | -5.43% | 26.07% |
* Communication Services Sector Average
Performance Comparison
SPHR
Sphere Entertainment
37.33
0.15
0.40%
CNK
Cinemark Holdings
31.56
14.78
88.08%
IMAX
IMAX
27.71
12.00
76.38%
AMC
AMC Entertainment
3.40
-2.39
-41.28%
PLAY
Dave & Busters Entertainment
22.64
-28.20
-55.47%
MSGE
Madison Square Garden Entertainment Corp.
37.28
2.52
7.25%
Sphere Entertainment Corporate Events
Executive/Board ChangesShareholder Meetings
Sphere Entertainment Director Carl E. Vogel to Step Down
Neutral
Mar 28, 2025
On March 24, 2025, Carl E. Vogel, a director elected by holders of the Class A Common Stock of Sphere Entertainment Co., announced he will not seek re-election at the upcoming 2025 Annual Meeting of Stockholders scheduled for June 4, 2025. Vogel’s decision is not due to any disagreements with the company, and he will continue his roles on the Compensation and Audit Committees until his term concludes.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.