Captivated by the Vegas Sphere: From First Glance to Investment Plans

ASHOOR

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It all started with a trip to Vegas on August 9, 2022, our family’s first since the pandemic started in 2020.

As the Uber driver was taking us from McCarren airport to the Venetian, a big sphere-shaped structure caught my attention. For a split second I thought to myself: hold on a second, what is that? Even though it looks under construction, how could I not have heard or read about it, since I am so into Vegas and know all the new things coming to the city.

So right away I asked our driver and he explained what it was. That same trip, staying at the Venetian, I was close to it to see it almost daily, whether walking or when driving.

Fast forward 12 months later, this thing is now complete - albeit not officially open- and people are absolutely in love and mesmerized by its design and more importantly the outside LED display.

So I thought to myself:

-too bad, why couldn’t they just turn this into a resort hotel, it would generate a lot more money than being a stand-alone concert venue.

-regardless of whether this is a resort or a concert venue only, one thing is true: it will not only be visible to anyone visiting Vegas - 40 million or more a year - it will captivate their imagination. So with this huge exposure, I thought of an idea: how can we invest in this thing? So I started researching to see if this company has a stock to trade and indeed it does: SPHR is the ticker symbol for Sphere Entertainment Co

And today, given my internet search about this topic of late, I got a notification of the article below that was curated for me by Bing Chat (AI generated)

So why not treat this like an investment project, solely based on the Sphere in Vegas? That is, with its official debut coming soon, why not start a small position in this company and see where the stock goes in 3-5 years? Yes, this would be better left there longer than a few months; to allow the Sphere to develop its magic to boost the company’s profitability and name.

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Source:

"SPHR is the ticker symbol for Sphere Entertainment Co., a company that engages in the entertainment business. It produces, presents, or hosts various live events, such as concerts, family shows, sporting events, and esports in its venues, including The Sphere in Las Vegas, which is set to open on September 29th with a series of shows by U2 ¹.
The company reported its fiscal 2023 fourth quarter and full year results on August 22nd, beating the analysts' earnings estimates. The company posted quarterly earnings of $10.21 per share, compared to a loss of $1.97 per share a year ago. The revenue for the quarter was $129.1 million, down from $453.54 million a year ago, due to the impact of the COVID-19 pandemic on the live entertainment industry ².
The company has been recovering from the pandemic-induced slump, as it hosted more than 5.5 million guests at nearly 900 live events in fiscal 2023. The company also repurchased $90 million worth of its Class A shares in the fourth quarter, signaling its confidence in its future growth prospects ³.
The stock price of SPHR has increased by about 104% in the past year, outperforming the S&P 500 index, which gained about 28% in the same period. The stock closed at $36.74 on August 25th, down from its 52-week high of $43.93 on July 14th ¹.
However, the stock price forecast for SPHR is not very optimistic, according to some analysts. The average 12-month target price for SPHR is $25.25, which implies a decrease of about 31% from the current level. The lowest target is $25 and the highest is $26. On average, analysts rate SPHR as a hold ⁴.
Some of the risks and challenges that SPHR faces include:
- The uncertainty and volatility of the COVID-19 situation and its impact on the demand and supply of live entertainment events.
- The high fixed costs and capital expenditures associated with operating and maintaining its venues and facilities.
- The intense competition from other entertainment providers and platforms, such as streaming services, social media, and gaming.
- The dependence on the popularity and availability of artists and performers, as well as the consumer preferences and trends in the entertainment industry.
- The potential legal and regulatory issues that may arise from its operations, such as intellectual property rights, labor disputes, environmental compliance, and taxation.
Some of the opportunities and strengths that SPHR has include:
- The unique and innovative design and technology of its venues, especially The Sphere in Las Vegas, which features a spherical shape, a LED exterior display, an immersive sound system, and a dynamic seating configuration.
- The loyal and diverse fan base that it has built over the years through its iconic brands and venues, such as The Garden, Radio City Music Hall, The Chicago Theatre, and Madison Square Garden Entertainment Corp.
- The strategic partnerships and alliances that it has formed with various artists, promoters, sponsors, broadcasters, and distributors to enhance its content offerings and reach.
- The financial flexibility and liquidity that it has maintained through prudent capital management and cost reduction measures.
- The growth potential and opportunities that it has in emerging markets and segments, such as esports, digital media, sports betting, and live streaming.
In conclusion, SPHR is a company that operates in a dynamic and competitive industry that has been severely affected by the COVID-19 pandemic. However, it has also shown resilience and innovation in adapting to the changing environment and delivering positive results. Investing in SPHR involves both risks and rewards, depending on one's risk appetite, time horizon, and investment objectives. As always, one should do their own research and due diligence before making any investment decisions.
Source: Conversation with Bing, 2023-08-27
(1) Sphere Entertainment Co. (SPHR) Stock Price, Quote & News - Stock Analysis. https://stockanalysis.com/stocks/sphr/.
(2) Sphere Entertainment (SPHR) Beats Q4 Earnings Estimates. https://www.nasdaq.com/articles/sphere-entertainment-sphr-beats-q4-earnings-estimates.
(3) Sphere Entertainment Co. (SPHR) - Stock Analysis. https://stockanalysis.com/stocks/sphr/forecast/.
(4) Sphere Entertainment (NYSE:SPHR) Stock Forecast & Analyst Predictions .... https://simplywall.st/stocks/us/media/nyse-sphr/sphere-entertainment/future.
(5) Sphere Entertainment Co. (SPHR) Stock Price Today, Quote & News. https://seekingalpha.com/symbol/SPHR."
 
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