Sphere Entertainment Co. (SPHR): A Star in the Ariel Investments Portfolio—Why This Small-Cap Entertainment Stock Is Lighting Up 2025

If you’re looking for a small-cap gem that’s caught the eye of value investing legend John W. Rogers of Ariel Investments, Sphere Entertainment Co. (NYSE:SPHR) is worth your attention. This company, which owns and operates the iconic Sphere venue in Las Vegas and the Madison Square Garden Entertainment (MSGE) assets, has been a standout in Ariel’s portfolio—and here’s why it could be a 2025 winner.

Why John Rogers Loves SPHR: The Ariel Playbook

John W. Rogers, Jr., co-founder of Ariel Investments, has long been a vocal advocate for small-cap value stocks, and SPHR fits the mold perfectly. In his Q1 2024 commentary, Rogers praised SPHR’s operational execution, citing its record-breaking experiential shows like Postcard from Earth and the massive sellout crowds for U2 concerts. The company’s takeover of the Sphere venue by Formula 1 (F1) also delivered a profitable boost, proving its ability to monetize premium events.

But SPHR isn’t just about past wins. Rogers sees its future in event-driven revenue streams, such as the Consumer Electronics Show (CES) and the Super Bowl in Las Vegas, which are expected to drive advertising and sponsorship deals through its Exosphere platform—the Sphere’s exterior advertising space. This aligns with Ariel’s strategy of backing companies with predictable cash flows and undervalued assets, even if they face short-term volatility.

The Numbers: A Rocky Start to 2025, But a Rally Ahead?

Let’s cut to the data. SPHR’s stock has been a rollercoaster in 2025:

• 52-week decline: -39.59%, closing at $24.84 on April 22, 2025.
• April 25 surge: A 12.2% pre-market jump on renewed institutional optimism, driven by Susquehanna’s initiation of coverage with a “Positive” rating.

Despite the dip, institutions are doubling down. While hedge fund ownership dropped sharply (from 58 to 1 fund in Q1 2025), stalwarts like Point72 and Citadel Advisors increased stakes. The total institutional ownership rose to 20.9 million shares—a 1.05% increase—showing patient investors are buying the dip.

Analysts Are Betting Big on SPHR’s Turnaround

Analysts aren’t just talking about SPHR—they’re pricing in a comeback. Guggenheim recently reaffirmed a “Buy” rating with a $69 price target, nearly 177% above its April 22 price. The rationale? Cost reductions, new sponsorship deals, and the launch of its Sphere Experience show, which could turn the Las Vegas venue into a cash cow.

Even Susquehanna’s recent “Positive” call signals a shift in sentiment. Meanwhile, operational improvements are critical:
- SPHR’s Las Vegas venue saw a 1% revenue rise to $169 million in Q4 2024, despite an adjusted operating loss.
- The MSG Networks segment, though struggling with subscriber losses, remains a cash generator.

The Risks: Don’t Blink—This Is a High-Stakes Gamble

No investment is without risks. SPHR’s heavy reliance on live events leaves it vulnerable to economic downturns, talent disputes, or regulatory changes. Its Q4 2024 loss of $3.49 per share—wider than expected—highlights execution challenges.

Plus, Ariel’s Q1 2025 focus on AI stocks (one unnamed pick surged while NVDA and AVGO fell) means SPHR isn’t the top dog in the portfolio. But here’s the key: value investing is about patience. SPHR’s valuation—trading at 17x forward earnings vs. 29x for large-cap growth stocks—makes it a steal if it hits its revenue targets of $2.82 billion in 2025.

The Bottom Line: A Buy for the Bold

John W. Rogers isn’t just a fan of SPHR—he’s betting on it. With $231.6 million in holdings and a long-term view, Ariel’s stance says it believes SPHR’s operational turnaround and event pipeline will pay off. The April surge suggests others agree.

While the stock isn’t for the faint-hearted, SPHR offers a 2025 upside of 177% to Guggenheim’s $69 target. Pair that with a valuation gap wider than ever between growth and value stocks, and this is a call option on the recovery of live entertainment—and a steal at current prices.

Action Plan: Buy SPHR if you can stomach volatility. Set a stop-loss at $20 and aim for the $69 target. As Rogers would say: “This isn’t a sprint—it’s a marathon. And SPHR’s finishing strong.”

Data as of April 2025. Past performance does not guarantee future results. Consult your financial advisor before making investment decisions.