Value
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 2.6 |
| P/S | 7.7 |
| EV/EBITDA | 0.0 |
| Analyst target | 6.0 |
SPHR · Why this verdict
Why Sphere Entertainment (SPHR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sphere Entertainment has beaten analyst earnings estimates in all 4 of the last reported quarters with an extraordinary average surprise of 269%, growing revenue at 38% year-over-year, but 36% short interest, rich valuation, a stock already past its analyst target, and negative asymmetry at current prices limit the investment case for new buyers.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Sphere Entertainment has beaten analyst estimates in all 4 of the last reported quarters with an average positive surprise of 269%, including a 580% beat in February 2026 and a 363% beat in August 2025 — suggesting the business is dramatically outperforming conservative analyst modeling. Earnings | Earnings beats continue in at least 3 of the next 4 quarters, even if average surprise moderates to 50%, confirming that the company's revenue model is consistently stronger than what analysts project. | ↓Deteriorating |
| CounterBeats of this magnitude typically indicate that analysts are working with incomplete information about a novel business model rather than persistent operational excellence; as the Sphere matures and gets covered by more analysts, surprise magnitude will likely compress toward single digits. | ||
Revenue is growing at 38% year-over-year, earning the highest possible growth score of 10.0 out of 10, and the company ranks 7.86 out of 10 among peers on growth, demonstrating that the Sphere entertainment concept is generating strong commercial demand. Growth breakdown | Revenue growth remains above 20% year-over-year in at least 3 of the next 4 reported quarters, sustaining the company's position as a high-growth entertainment operator. | →Stable |
| CounterThe company's only operating venue is the Las Vegas Sphere, creating extreme concentration: growth depends entirely on residency programming and sponsorship deals at a single facility, which limits how large or durable the growth can be. | ||
Short interest at 36% of float is flagged as high by the risk model, and the stock has already exceeded its analyst price target (the bull case notes -8% upside remaining), meaning new buyers are paying beyond consensus fair value while 36% of float is in short positions betting on a decline. Key risks | Short interest falls below 20% within 6 months as strong earnings data forces short sellers to cover, and analyst targets are revised upward by at least 15% to reflect the improved earnings trajectory. | ↑Improving |
| CounterHigh short interest in a stock trading above its price target with negative asymmetry (-8% upside, 15% downside per the calculation) is a rational positioning by sophisticated investors; the burden of proof for longs is very high at current price levels. | ||
Free cash flow represents 370% of reported net income, indicating that non-cash charges (depreciation on the high-cost Sphere asset) are masking the underlying cash generation potential of the business, and the overall quality score is 4.7 out of 10 with an economic moat score of 7.1. Quality breakdown | Free cash flow per share grows by at least 25% year-over-year over the next annual reporting period, confirming that cash generation is accelerating as the Sphere's fixed cost base is leveraged over growing revenue. | →Stable |
| CounterA quality score of 4.7 is below average, return on assets scores 0.0, and the business had an operating margin component of only 1.1 out of 10, meaning that despite strong cash conversion, the core operating economics remain challenged. | ||
Sphere Entertainment has beaten analyst estimates in all 4 of the last reported quarters with an average positive surprise of 269%, including a 580% beat in February 2026 and a 363% beat in August 2025 — suggesting the business is dramatically outperforming conservative analyst modeling.
↓DeterioratingEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters, even if average surprise moderates to 50%, confirming that the company's revenue model is consistently stronger than what analysts project.
CounterBeats of this magnitude typically indicate that analysts are working with incomplete information about a novel business model rather than persistent operational excellence; as the Sphere matures and gets covered by more analysts, surprise magnitude will likely compress toward single digits.
Revenue is growing at 38% year-over-year, earning the highest possible growth score of 10.0 out of 10, and the company ranks 7.86 out of 10 among peers on growth, demonstrating that the Sphere entertainment concept is generating strong commercial demand.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% year-over-year in at least 3 of the next 4 reported quarters, sustaining the company's position as a high-growth entertainment operator.
CounterThe company's only operating venue is the Las Vegas Sphere, creating extreme concentration: growth depends entirely on residency programming and sponsorship deals at a single facility, which limits how large or durable the growth can be.
Short interest at 36% of float is flagged as high by the risk model, and the stock has already exceeded its analyst price target (the bull case notes -8% upside remaining), meaning new buyers are paying beyond consensus fair value while 36% of float is in short positions betting on a decline.
↑ImprovingKey risks
- Expectation
- Short interest falls below 20% within 6 months as strong earnings data forces short sellers to cover, and analyst targets are revised upward by at least 15% to reflect the improved earnings trajectory.
CounterHigh short interest in a stock trading above its price target with negative asymmetry (-8% upside, 15% downside per the calculation) is a rational positioning by sophisticated investors; the burden of proof for longs is very high at current price levels.
Free cash flow represents 370% of reported net income, indicating that non-cash charges (depreciation on the high-cost Sphere asset) are masking the underlying cash generation potential of the business, and the overall quality score is 4.7 out of 10 with an economic moat score of 7.1.
→StableQuality breakdown
- Expectation
- Free cash flow per share grows by at least 25% year-over-year over the next annual reporting period, confirming that cash generation is accelerating as the Sphere's fixed cost base is leveraged over growing revenue.
CounterA quality score of 4.7 is below average, return on assets scores 0.0, and the business had an operating margin component of only 1.1 out of 10, meaning that despite strong cash conversion, the core operating economics remain challenged.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.8 |
| ROA | 0.0 |
| Gross margin | 7.0 |
| Op margin | 1.1 |
| Net margin | 4.3 |
| Current ratio | 4.7 |
| FCF quality | 10.0 |
| Moat | 7.1 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 370% FCF/NI
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 38% YoY
Momentum
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.3 |
| MACD | 0.0 |
| OBV | 4.5 |
| MA position | 4.0 |
| Volume | 1.0 |
- ▸Oversold in uptrend (RSI 25)
- ▸Above 200-day MA
Sentiment
8.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 9.0 |
| Analyst rating | 8.3 |
| Price target | 8.4 |
- ▸LLM news sentiment: +0.80 (n=1)
- ▸Analyst upside: 27%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.4 |
| quality rank | 5.5 |
| growth rank | 8.6 |
- ▸Industry growth leader
Technical
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.6 |
| support resistance | 9.4 |
| 52w position | 5.8 |
Risk (lower is worse)
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 0.8 |
| volatility | 0.0 |
| beta | 4.7 |
| debt equity | 8.3 |
- ▸High short interest: 36%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Extreme risk factors.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:RISK_FLOORPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.80
- EARNINGS_PROXIMITY:16d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.6<4.5
- ASYMMETRY:0.8<1.5@spot
Warning (0)
none
Reward-to-Risk
0.84
Upside
+10.8%
Downside
12.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 16d with 4/4 beat streak
SuitabilityAggressive — Beta 1.60>1.3
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 3.6<4.5 outcome against Growth at 10.0 and asymmetric R:R of 0.84.
The strongest dimensions are Growth at 10.0, Sentiment at 8.5, and Technical at 7.9; the weakest are Risk (lower is worse) at 2.8, Momentum at 3.6, and Quality at 4.7. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.84 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak Extreme Surprises
Trip ifEarnings surprise falls below 0% in at least 2 of the next 4 quarters, indicating the analytical outperformance pattern has ended.
- P2Strong Revenue Growth Profile
Trip ifRevenue growth falls below 10% year-over-year in any single reported quarter, indicating the Sphere concept is not sustaining demand momentum.
- P3High Short Interest Target Exceeded
Trip ifShort interest rises above 45%, more than 9 percentage points above the current 36%, indicating that bearish professional conviction is intensifying.
- P4Exceptional Cash Conversion Quality
Trip ifFree cash flow falls below 150% of net income for 2 consecutive quarters, indicating the high-conversion thesis is not being sustained.