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 could be wise to avoid fundamentally weak entertainment stocks Madison Square Garden Entertainment (MSGE), Genius Sports (GENI), and fuboTV (FUBO) as they could fall further. Read on….
Although the entertainment industry made a strong recovery after the reopening of the economy, the macroeconomic headwinds have hammered several entertainment stocks this year. Soaring inflation, the spike in fuel prices, geopolitical concerns, and fears of a recession have marred the industry’s recovery.
With inflation remaining elevated, Americans are cutting back on entertainment spending, resulting in revenue declines for the companies in this space. About 30% of surveyed U.S. consumers said they plan to spend less on concerts, sporting events, and night outs.
Since a possible recession could dampen the demand for entertainment and leisure companies, we think entertainment stocks Madison Square Garden Entertainment Corp. (MSGE), Genius Sports Limited (GENI), and fuboTV Inc. (FUBO) are best avoided now.
Madison Square Garden Entertainment Corp. (MSGE)
MSGE provides live entertainment services, including venues, marquee entertainment brands, regional sports and entertainment networks, dining and nightlife offerings, and music festivals. It operates through 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’s net loss widened by 161.2% from the year-ago value to $99.94 million. Also, its loss per share widened by 167.8% year-over-year to $3.
Analysts expect MSGE’s EPS 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, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a D grade for Stability, Sentiment, and Quality. It is ranked #14 out of 16 stocks in the F-rated Entertainment – Sports & Theme Parks industry. Click here to see the other ratings of MSGE for Growth, Value, and Momentum.
Genius Sports Limited (GENI)
GENI manufactures and sells technology-leading products and services to the sports, sports wagering, and sports media industries. It also provides technology infrastructure collection, integration, and distribution of live data of sports leagues; streaming solutions; and end-to-end integrity services to sports leagues.
For the fiscal second quarter ending June 30, 2022, GENI’s loss from operations narrowed 90.7% year-over-year to $39.69 million. The company’s net loss and net loss per share also narrowed 99% and 99.3% from the year-ago value to $4.75 million and $0.02, respectively. As of June 30, 2022, the company’s total assets decreased 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 bleak outlook. It has an overall rating of D, equating to a Sell in our proprietary rating system.
It has an F grade for Quality and a D for Momentum and Stability. Within the same industry, it is ranked #11. To see the other ratings of GENI for Growth, Value, and Sentiment, click here.
fuboTV Inc. (FUBO)
FUBO operates as a live TV streaming platform for sports, news, and entertainment content in the United States and worldwide. Its fuboTV platform permits 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 widened 38.8% from the year-ago value to $112.52 million.
The company’s net loss came in at $116.27 million, widening 22.5% from the year-ago period, while its adjusted EBITDA loss widened 67% year-over-year to $79.10 million. Also, its adjusted loss per share came in at $0.45, up 21.6% from the year-ago period.
Analysts expect FUBO’s EPS to remain negative for fiscal 2022. The stock has declined 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 F rating, equating to a Strong Sell in our proprietary rating system.
It also has an F for Stability and Quality and a D for Momentum and Sentiment. Again, in the same industry, it is ranked last. Click here to see the other ratings of FUBO for Growth and Value.
MSGE shares were trading at $54.87 per share on Thursday morning, down $0.69 (-1.24%). Year-to-date, MSGE has declined -21.99%, versus a -16.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta’s profound 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 educated investment decisions.
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