2 entertainment stocks to cut and 1 to grab – News 24

There are good entertainment actions, and then there are bad entertainment actions, like AMC Entertainment (NYSE :AMC).

The big title told the story. “AMC Stock Falls After Disney Box Office Flop”. Stocks are on track for their worst year ever. I don’t know about you, but “never” is a long word.

As Barron’s pointed out, the movie business appears to be doing better than a year ago – five-day box office sales for the Thanksgiving holiday this year were $172 million, considerably more than the $122 .8 million a year ago – which suggests there are some good stocks out there. buy from the bad ones.

Year to date through November 27, the domestic box office was $8.24 billion, on track to reach $9 billion by the end of 2023. That’s not not $11 billion like in 2019 before the pandemic, but it’s moving forward.

So which ones should you ditch? Which ones should you take? I have two ideas for the first and one for the second.

AMC Entertainment (AMC)

AMC Entertainment’s stock price is down nearly 78% in 2023, more than 89% over the past year, and 88% over the past five years. If you factor in AMC’s June 2021 meme stock highs, its shares are down 97%.

An indication of how junk meme stocks have become, Roundhill Investments is closing the ETF Roundhill MEME (NYSEARCA :EVEN) on December 11. Spear Nearly two years ago, the ETF would liquidate its holdings and send the proceeds to shareholders on December 14.

According to Investor Affairs Daily, more than 80% of the ETF’s 25 holdings are down from December 12, 2021, when it launched – equally weighted and rebalanced every two weeks. AMC is the lowest weighting in the ETF, at 3.32%. Given AMC’s performance in 2023, this is likely the lowest weighting for most of the year.

Oddly, although three of the seven analysts covering AMC have given it an outright sell rating, the median target price is $8 per share, or 17% above the current price.

I’ve had a problem with AMC stock for as long as I can remember. I just didn’t believe what CEO Adam Aron was selling. Most recently, in October, I suggested he resign after the catfishing scheme he became embroiled in.

AMC still features Aron’s long list of high-profile CEO jobs, including a decade in the top job has Resorts in Vail (NYSE :MTN) between June 1996 and June 2006. However, most of the stock’s growth occurred well after he left the company.

His biggest problem is that he is saddled with too much debt… $9.3 billion from the third quarter of 2023 – for far too long. You can’t make money in the movie business when you’re saddled with debt. This works best when assets are light.

Discovery of Warner Bros. (WBD)

Source: Ingus Kruklitis / Shutterstock.com

Discovery of Warner Bros. (NASDAQ:WBD) is a huge entertainment company with huge debt – around $44.8 billion, or 162% of its current market cap.

Its CEO, David Zaslav, is a well-paid general manager — 286 million dollars over the past two financial years – which convinced its board that it made sense to buy Warner Media from AT&T (NYSE :T) In 2022imposing excessive interest payments on the merged entity.

The argument for buying Warner Media was to evolve its HBO streaming service with Discovery Communication’s Discovery+ streaming service to create a platform to take market share from Netflix (NASDAQ:NFLX) and Disney+.

How is WBD so far?

Warner Bros. Discovery released its results on November 8. They weren’t good. Its shares fell nearly 20% on the news. Much of the disappointment: Max, its streaming service around HBO, lost 2.5 million subscribers over the past two quarters, which defeats the goal of adding all the debt needed to buy Warner Media.

At the same time, all of his peers gained subscribers in the last quarter (Max lost 700,000), suggesting that the list of goods Zaslav sold to his board is not coming to fruition as promised.

“Warners’ underperformance is a bit disappointing given that everyone else has done better,” said Naveen Sarma, managing director of S&P Global. Fortune.

Essentially, and this is just my opinion, not a fact, former AT&T CEO Randall Stephenson created an ego project for himself when his company purchased Time Warner in 2018 for $85.4 billionthen David Zaslav created his ego project by merging with Warner Media.

I don’t see why anyone would invest in a company that was involved in not one but two ego projects.

Sphere Entertainment (SPHR)

Source : rblfmr / Shutterstock.com

Entertainment Sphere (NYSE :SPHR) is the company behind Sphere, the $2.3 billion state-of-the-art performance hall in Las Vegas opened by U2 in September. The venue can accommodate 18,600 people and, more impressively, 54,000 square meters (581,251 square feet) of light-emitting diodes (LEDs).

Sphere is the new name of Entertainment at Madison Square Garden (NYSE :M.S.G.E.). It was swarmed in April 2023 to create a live entertainment and media dynamo that includes the Sphere site and MSG Networks, its regional sports broadcasting business. MSGE owns Madison Square Garden’s non-sports assets, including Madison Square Garden, Radio City Music Hall, the Radio City Rockettes and the Beacon Theater.

This is not a title that we should expect big things from soon. However, due to the popularity of U2’s opening concert, Sphere added 11 concerts to the band’s residency. They will now play 36 concerts between the end of September and February.

As expected, the company lost 58 million dollars on an adjusted basis for the first quarter ended September 30. Revenue will be significantly higher when it releases its next quarterly results in February. Onwards and upwards.

Live shows and events remain one of the most profitable and growing segments of the entertainment industry. I expect big things from Sphere in 2024 and beyond. It’s a derivative purchase.

As of the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in any securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com’s publishing guidelines.