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 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 economy reopened, macroeconomic headwinds have hit some entertainment stocks this year. Rising inflation, rising fuel prices, geopolitical concerns and fears of a recession have hurt the industry’s recovery.
With inflation remaining elevated, Americans are cutting back on entertainment spending, resulting in decreased revenues for companies in this space. About 30% of American consumers surveyed said they plan to spend less on concerts, sporting events and nights out.
Since a potential recession could dampen demand for entertainment and leisure companies, we think entertainment stocks have Madison Square Garden Entertainment Corp.MSGE), Genius Sports Limited (THE FINDINGS), and fuboTV Inc. (FUBO) are best avoided now.
Madison Square Garden Entertainment Corp. (MSGE)
MSGE offers live entertainment services, including venues, branded 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. to the company net loss expanded by 161.2% from the previous year’s value to $99.94 million. Also, its loss per share widened 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 it POWR Ratings. It has an overall rating of D, which equates to a Sell in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted on an optimal scale.
It has a grade of D for Stability, Sensitivity and Quality. It ranks 14th out of 16 stocks in the F rating Entertainment – Sports and theme parks industry. Click here to see other MSGE Ratings for Growth, Value and Momentum.
Genius Sports Limited (THE FINDINGS)
GENI manufactures and sells technology-leading products and services for the sports, sports betting and sports media industries. It also provides the technology infrastructure collection, integration and distribution of live data of sports leagues; transmission solutions; and end-to-end integrity services for 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 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 year 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 estimates are consistent with this bleak view. It has an overall rating of D, which equates 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 ranks #11. To see GENI’s other Growth, Value and Sentiment ratings, Click 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 Smart TVs, 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 a year ago 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 fallen 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, which equates 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 ranks last. Click here to see other FUBO Growth and Value ratings.
Shares of MSGE traded 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% gain 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 educated investment decisions.
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