Published on: October 14, 2024, 05:14h.
Last updated on: October 14, 2024, 05:14h.
Shares of Sphere Entertainment (NYSE: SPHR) surged late Monday following the company’s confirmation of a new venue in Abu Dhabi, United Arab Emirates (UAE).
The stock closed higher by 3.39% on volume that was roughly four times the daily average after Sphere revealed its plans for the new property. The original Sphere in Las Vegas has quickly become a prominent entertainment destination in the US casino scene.
This next-generation entertainment medium is expected to be a landmark addition to this premier international capital city, elevating the entertainment offerings for residents and visitors alike,” according to a statement issued by Sphere Entertainment.
The announcement of Sphere’s expansion into UAE signals the emirates’ growing acceptance of Las Vegas-style entertainment. Recently, gaming regulators in the region approved the first-ever casino license, awarded to Wynn Resorts (NASDAQ: WYNN), for the construction of Wynn Al Marjan Island in Ras Al Khaimah (RAK).
Significance of Sphere Abu Dhabi News
Sphere’s expansion into UAE could alleviate concerns among investors about the company’s future venue additions, addressing scalability issues that some analysts have raised.
Last year, London rejected the idea of hosting a second Sphere, citing potential disruptions to residents. This raised worries among investors about Sphere’s growth potential.
New venues are crucial for Sphere Entertainment’s investment outlook, with Wolfe Research suggesting that each new property could add up to $700 million in value.
Before the Abu Dhabi news, Wolfe Research had indicated high probabilities of a second and potentially a third Sphere venue in the future. The company has not disclosed any other expansion plans beyond Abu Dhabi.
Another Reason for Sphere Stock Rally
In addition to the Abu Dhabi news, Sphere’s stock rally on Monday was supported by the agreement of Madison Square Garden Network creditors to a one-month forbearance on debt owed by the regional sports network (RSN).
Sphere disclosed this agreement with creditors in a filing with the Securities and Exchange Commission (SEC) on Oct. 11. The substantial debt of nearly $830 million held by RSN has been a concern for investors, but despite this, Sphere’s stock has increased by 35.42%.
The deal with Madison Square Garden Network bondholders could indicate that Sphere is able to restructure its debt without needing to issue new bonds or shares, a move that could potentially upset creditors and equity investors.