What happened
Madison Square Garden Entertainment (SPHR 1.84%) stock was well outpacing the market on Thursday. As of 12:45 p.m. ET, its shares were up by 14% compared to a 0.2% increase in the S&P 500. That rally put the stock, which just began trading on public markets, up 13% in the past month.
That boost came as investors reacted to the live entertainment specialist's fiscal third-quarter results and its updated outlook for the fiscal year.
So what
The old Madison Square Garden Entertainment spun off its live entertainment business in a transaction that was completed on April 20. The new company kept the name, while the parent was renamed Sphere Entertainment.
In the earnings report that was released before the market opened Thursday, Madison Square Garden Entertainment management said that the business was seeing strong demand for in-person entertainment events. Most of its concerts in venues around New York City and Chicago are selling out, which helped push its revenue up by 4% year over year for the period, which ended March 31.
Operating profit jumped as well, by 56% to $25 million. "The company continues to benefit from robust consumer and corporate demand for live experiences," executives said in the press release.
It aims to surpass 5 million guests across 900 events at its venues this fiscal year, management noted.
Now what
The generally positive selling environment is keeping the company on track to meet its financial targets for its first fiscal year as a standalone company. Executives forecast that revenue will land between $835 million and $845 million in fiscal 2023, refining their prior outlook. The company confirmed its adjusted operating income prediction, which calls for solid profitability for the year.
The updated outlook eased some investor concerns that a pullback in consumer discretionary spending could pressure demand for live entertainment, especially as prices rise for many shows.
Yet Madison Square Garden Entertainment still faces the larger challenge of demonstrating that it can sustainably grow sales and earnings in a wide range of economic conditions. That's why investors might want to wait to see its next few quarterly reports before deciding whether or not to buy this volatile growth stock.
