Sphere Entertainment (SPHR) AI Stock Analysis

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Sphere Entertainment

(NYSE:SPHR)

58Neutral

Sphere Entertainment's stock is challenged by inconsistent revenue growth and profitability pressures. While technical indicators suggest positive short-term momentum, valuation metrics indicate significant risks with ongoing losses. The earnings call points to strong revenue performance and strategic initiatives, balanced by operational challenges and declining segments.

Positive Factors

Debt Restructuring

Sphere announced an agreement with the MSG Networks term loan lending group to reduce the outstanding loan from over $800mm to $210mm.

Growth Opportunities

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.

Negative Factors

Cash Flow Concerns

Free cash flow for the Sphere business, including Las Vegas and Abu Dhabi, is expected to remain modestly negative until 2029.

Financial Performance

Sphere Entertainment reported revenues of $308M for the quarter, disappointing results, and reflecting a 2% decline YoY due to continued weakness in the Sphere segment.

Sphere Entertainment (SPHR) vs. S&P 500 (SPY)

Market Cap

$1.29B

Dividend YieldN/A

Average Volume (3M)1.06M

Price to Earnings (P/E)―

Beta (1Y)1.66

Revenue Growth29.49%

EPS Growth-184.23%

CountryUS

Employees1,080

SectorCommunication Services

Sector Strength88

IndustryEntertainment

Share Statistics

EPS (TTM)-2.27

Shares Outstanding29,132,664

10 Day Avg. Volume988,411

30 Day Avg. Volume1,062,719

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

$45.44

Price Target Upside39.77% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

Sphere Entertainment Business Overview & Revenue Model

Company DescriptionSphere Entertainment Co. (SPHR) is a pioneering entertainment and media company that focuses on transforming the way people experience entertainment through immersive and cutting-edge technologies. Headquartered in the United States, Sphere Entertainment operates in sectors such as live entertainment, immersive media, and experiential technology. The company's core offerings include the state-of-the-art Sphere venues, which host a variety of live performances, events, and immersive experiences that leverage advanced audiovisual technology to create unparalleled entertainment experiences.

How the Company Makes MoneySphere Entertainment Co. generates revenue primarily through ticket sales for events and experiences held at its Sphere venues, which are designed to provide unique, immersive entertainment experiences. In addition to ticket sales, the company earns money from leasing its venues for private events and collaborations with artists and performers who wish to utilize the advanced technological capabilities of the Sphere to enhance their shows. Partnerships with content creators and technology providers also contribute to its earnings, as these collaborations often result in co-produced events or experiences that draw larger audiences. Furthermore, Sphere Entertainment explores additional revenue streams through merchandise sales, concessions, and licensing of its proprietary technology for use in other entertainment and media applications.

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

Neutral

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.

Balance Sheet

Neutral

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.

Cash Flow

Neutral

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.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
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

Technical Analysis Sentiment

Positive

Last Price32.51

Price Trends

50DMA

30.54

Positive

100DMA

36.81

Negative

200DMA

39.93

Negative

Market Momentum

MACD

0.50

Negative

RSI

69.23

Neutral

STOCH

90.91

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPHR, the sentiment is Positive. The current price of 32.51 is above the 20-day moving average (MA) of 27.99, above the 50-day MA of 30.54, and below the 200-day MA of 39.93, indicating a neutral trend. The MACD of 0.50 indicates Negative momentum. The RSI at 69.23 is Neutral, neither overbought nor oversold. The STOCH value of 90.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks

Sphere Entertainment Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNK	75 Outperform	$3.59B	20.63	71.46%	0.26%	-0.80%	13.07%
IMAX	70 Outperform	$1.39B	55.97	9.00%	―	-1.98%	-1.18%
MSGE	66 Neutral	$1.72B	13.24	1222.83%	―	5.81%	133.05%
PLAY	65 Neutral	$763.77M	15.91	29.37%	―	-3.30%	-48.76%
Sector *	60 Neutral	$13.79B	7.12	-2.72%	3.79%	2.18%	-42.65%
SPHR	58 Neutral	$1.29B	―	-14.67%	―	29.49%	-184.23%
AMC	44 Neutral	$1.18B	―	20.03%	―	-5.43%	26.07%

* Communication Services Sector Average

Performance Comparison

SPHR

Sphere Entertainment

35.74

-2.82

-7.31%

CNK

Cinemark Holdings

30.32

12.35

68.73%

IMAX

25.93

8.39

47.83%

AMC

AMC Entertainment

2.73

-2.46

-47.40%

PLAY

Dave & Busters Entertainment

22.12

-33.28

-60.07%

MSGE

Madison Square Garden Entertainment Corp.

37.41

0.98

2.69%

Sphere Entertainment Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q2-2025)

% Change Since: 12.14%|

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 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.