MSGE - MSG Entertainment stock drops over 13% to record low as higher costs drag earnings

Madison Square Garden Entertainment ( NYSE: MSGE ) stock dropped 13.7% to an all-time low on Wednesday after the company posted Q1 earnings that missed estimates , hurt by higher costs at MSG Networks and Tao Group Hospitality.

Q1 EPS was -$1.30, with total adj. operating income down ~73% Y/Y at $2.8M.

MSG Networks adj. operating income decreased 41% to $32.9M due to decrease in revenues and higher direct operating expenses.

Tao Group Hospitality adj. operating income fell 44% to $14.6M due to higher direct operating and SG&A expenses.

MSG Entertainment ( MSGE ) said it is on track to open MSG Sphere at The Venetian in Las Vegas in H2 2023.

But the company raised its construction cost estimate to ~$2.175B vs. prior estimate of ~$2B, reflecting ongoing impact of high inflation, global supply chain pressures and overall complexity of the project. Actual construction costs incurred through Sept. 30 were ~$1.78B.

Remaining construction costs will be funded with cash on hand and cash flow from operations, including the impact of the firm's plans for a cost reduction program and to reduce or defer certain discretionary capital projects.

Shares of MSG Entertainment ( MSGE ) declined ~46% YTD.

The stock is at high risk of performing badly, to the point that it gets a Sell rating from SA Quant .

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