Sphere Entertainment Stock Drops as Analysts Issue Short-Selling Warning
Sphere Entertainment (NYSE: SPHR) stock declined Thursday following a bearish recommendation from Hedgeye analyst Andrew Freedman, who projected up to 30% downside potential.
Las Vegas Sphere at night
Key concerns highlighted by Freedman include:
- Persistent high operating costs
- Challenges in achieving profitability through 2025
- Need for significant growth in Sphere Experience segment
- Questions about reducing show volumes as a viable strategy
Current challenges facing Sphere:
- 10% stock decline over the past month
- 29.5% short interest
- $125.1 million Q3 operating loss
- Four consecutive months of declining Nevada gaming revenue
Despite these headwinds, shorting SPHR carries risks:
- Potential announcements of new high-profile residencies
- Development of new entertainment options
- Plans for Sphere-specific version of "The Wizard of Oz"
The company recently addressed concerns about its Madison Square Garden Network debt through an SEC filing on October 11, dealing with nearly $830 million in liabilities that had been weighing on the stock.
Success factors for Sphere's future viability include:
- Securing top-tier acts and programming
- Landing marquee one-off events
- Managing high operating costs
- Maximizing revenue from single-screen venue