Investors can track insider buying activity to gauge whether company leadership likes the prospects for their own stock at current prices. “Insider buying” refers to purchases of company shares by executives, board members, and major shareholders (owning 10% or more) – in other words, individuals with deep knowledge of the company's operations. These informed bets on the company's future are generally seen as a bullish sign, suggesting these insiders believe the share price will rise.
Considering this, it's worth pointing out that the CEO of one small-cap company recently invested over $5 million in his own stock. Here's a closer look at the heavy insider buying activity on this Russell 2000 Index (RUT) component, and what the rest of Wall Street expects for the shares.
About Sphere Entertainment Stock
Following its April 2023 split with the Madison Square Garden Entertainment Corp. (MSGE), Sphere Entertainment (SPHR) is now a dedicated premier live entertainment and media company. It owns and operates the "Sphere" venue in Las Vegas, featuring cutting-edge technology for immersive live experiences. Additionally, they produce and invest in various entertainment projects, including films and residencies.
With a market cap of $1.67 billion, Sphere Entertainment's share price has rallied 40% on a YTD basis. By contrast, the broader RUT is up 2.9% in 2024.
CEO Stock Purchase Exceeds $5M
Sphere Chairman and CEO James Lawrence Dolan seems to think the stock is a good value around current levels, as he bought the company's shares on two separate dates in February.
On Feb. 26, Dolan purchased 59,374 shares of SPHR at an average price of $41.1126 per share, valuing the buy at $2.44 million. Shortly after, on Feb. 28, he went on to buy 76,139 more shares of the company at a lower average price of $40.7273 each, for a total value of $3.1 million.
With these two transactions totaling over $5.5 million completed, Dolan now owns a stake worth 1.93% of the company.
Notably, these purchases were the first insider buying on SPHR since a relatively small $29K pickup in 2022, before the spin-off of what's now known as MSGE took place.
Mixed Q2 Results for SPHR
Sphere Entertainment's results for the latest quarter were mixed. The company reported a loss of $4.91 per share, or $1.35 on an adjusted basis - much wider than analysts expected. However, revenues almost doubled to $314.2 million from $159.5 million in the year-ago period, and came in stronger than expected.
One of the key drivers of this growth was the company's continued association with the legendary rock band U2. Multiple sold-out shows and extensions of the band's residency due to strong demand significantly contributed to SPHR's revenues.
Despite stiff competition in the area, the Sphere in Las Vegas has become a prominent tourist attraction in quite a short period of time. In fact, after opening in late September 2023, the Sphere reported that the first 17 shows of its U2 live residency generated over $30 million in revenue through Nov. 30 alone.
Since then, the venue has been featured as part of the F1, Super Bowl, and Grammys, with events expected later this year for the UFC and NHL draft.
Further, top bands such as Phish and Dead & Co. each announced multi-night performances to take place at Sphere. Lastly, the Sphere Experience featuring Postcard from Earth grossed over a million dollars in average daily ticket sales during the quarter.
After the shares fell in response to a poorly received debt offering late last year, SPHR has also bolstered its cash position. The company closed the December quarter with a cash balance of $627.8 million, up from $429.1 million at the end of the June quarter.
What Do Analysts Expect for SPHR Stock?
Analysts are cautiously optimistic on this Russell 2000 stock, with a consensus rating of “Moderate Buy” - up from “Hold” three months ago. Out of 7 analysts covering the stock, 2 have a “Strong Buy” rating and 5 have a “Hold” rating.
However, at $47.90 per share, SPHR is trading above even its Street-high price target of $45.00.
