High inflation and other macroeconomic headwinds have hit the leisure and entertainment industry. With the Fed maintaining its hawkish stance, the market is expected to remain under pressure. Therefore, it may be wise to avoid fundamentally weak entertainment sector stocks Madison Square Garden Entertainment ( MSGE ), Genius Sports ( GENI ), and fuboTV ( FUBO ) as they could fall further. Read on…
Although the entertainment industry has rebounded strongly since the economy reopened, macroeconomic headwinds have hit several entertainment stocks this year. Rising inflation, a spike in fuel prices, geopolitical concerns and fears of a recession have clouded the industry’s recovery.
With inflation remaining high, Americans are cutting back on entertainment spending, leading to a decline in revenue for companies in this space. About 30% of US consumers surveyed say they plan to spend less on concerts, sporting events and nights out.
As a possible recession could dampen demand for entertainment and leisure companies, we think entertainment sector shares Madison Square Garden Entertainment Corp. (MSGE), Genius Sports Limited (GENES) and fuboTV Inc. (FUBO) are best avoided now.
Madison Square Garden Entertainment Corp. (MSGE)
MSGE provides live entertainment services including venues, entertainment brands, regional sports and entertainment networks, dining and nightlife offerings and music festivals. It operates in the following segments: Entertainment, MSG Networks and Tao Group Hospitality.
MSGE’s adjusted operating income for the fiscal fourth quarter ended June 30, 2022, decreased 71.7% year-over-year to $0.71 million. The company net loss increased by 161.2% from a year ago to $99.94 million. Additionally, loss per share increased 167.8% year over year to $3.
Analysts expect MSGE’s earnings per share for the quarter ending September 30, 2022 to remain negative. Over the past year, the stock has lost 30.7% to close the last trading session at $55.56.
MSGE’s weak fundamentals are reflected in its POWR ratings. It has an overall rating of D, which equates to a Sell in our own rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a D rating for stability, mood and quality. It is ranked #14 out of 16 stocks in the F ranking Entertainment – Sports and theme parks industry. Press here to see MSGE’s other growth, value and momentum ratings.
Genius Sports Limited (GENES)
GENI manufactures and markets technology-leading products and services for the sports, sports betting and sports media industries. It also provides the technology infrastructure to collect, integrate and distribute live data from sports leagues; streaming solutions; and end-to-end integrity services for sports leagues.
For the fiscal second quarter ending June 30, 2022, GENI’s loss from operations shrank 90.7% year over year to $39.69 million. The company’s net loss and net loss per share also shrank 99% and 99.3% from a year ago to $4.75 million and $0.02, respectively. As of June 30, 2022, the company’s total assets decreased by 12.3% to $777.99 million from $887.08 million as of December 31, 2021.
GENI’s EPS for fiscal 2022 is expected to remain negative. Over the past year, the stock has lost 80% to close the last trading session at $4.10.
GENI’s POWR ratings are consistent with this gloomy outlook. It has an overall rating of D, which equates to a Sell in our own rating system.
It is rated F for quality and D for impulse and stability. Within the same industry, it is ranked #11. To see GENI’s other growth, value and sentiment ratings, Press here.
fuboTV Inc. (FUBO)
FUBO operates as a live television broadcast platform for sports, news and entertainment content in the United States and around the world. Its fuboTV platform allows customers to access content through streaming devices and on SmartTVs, computers, mobile phones and tablets.
FUBO’s total operating expenses for the fiscal second quarter ended June 30, 2022, increased 57.8% year-over-year to $334.41 million. Its operating loss increased 38.8% from a year ago to $112.52 million.
The company’s net loss was $116.27 million, up 22.5% year-over-year, while its adjusted EBITDA loss increased 67% year-over-year to $79.10 million. Additionally, its adjusted loss per share was $0.45, up 21.6% from the prior period.
Analysts expect FUBO’s EPS to remain negative for fiscal 2022. The stock is down 87.6% over the past year to close the last trading session at $3.62.
FUBO’s weak fundamentals are reflected in its POWR ratings. It has an overall rating of F, which equates to a strong sell in our own rating system.
It also has an F for stability and quality and a D for momentum and mood. Again in the same branch it is in last place. Press here to see FUBO’s other growth and value ratings.
MSGE stock was trading at $54.87 per share on Thursday morning, down $0.69 (-1.24%). Year-to-date, MSGE is down -21.99%, versus a -16.83% rise in the benchmark S&P 500 over the same period.
About the Author: Shweta Kumari
Shweta’s keen interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make informed investment decisions.
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