After 2016's unwelcome dual arena closures, Japan's live entertainment industry recorded its best-ever year in 2017, provisional figures suggest
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The major stock market-listed live businesses have increased their market caps by a collective $8.3bn since mid-2017 – $7bn of it this year alone
By Jon Chapple on 20 Aug 2019
The major publicly traded live entertainment companies have increased their collective market value by more than US$8 billion in just two years, reflecting growing investor confidence in the industry.
Analysing the market capitalisations of Live Nation, CTS Eventim, Madison Square Garden Company, Deutsche Entertainment AG and Brazil’s T4F Entertainment (Time 4 Fun), as well as eBay’s StubHub and Vivendi’s live businesses, reveals the seven were worth around $8.4bn more at the end of June 2019 than in the same period two years previous.
The bulk of the heavy lifting was done by market leader Live Nation, whose share price stood at $66.25 at the end of the first half (H1) of the 2019 financial year. Journalist and stock-market analyst Manfred Tari notes that LN stock has in recent years vastly outperformed the Dow Jones Industrial Average, which tracks the value of 30 large public companies in the US.
“Since August 2016, the Dow Jones has recorded gains of more than 40%,” he observes. “Meanwhile, Live Nation shares have gained more than 40% since August 2018, boosted by positive analyst ratings and institutional investors raising their shareholdings.”
Nevertheless, five of the seven companies increased their market cap in that time – with only eBay, whose StubHub ticketing business accounts for just an eighth of its turnover, and T4F down in value.
“We hear a lot of talk about the ‘experience economy’, and these figures reflect that”
Several companies were not included in IQ’s analysis: Liberty Media (FWONK) owns a third of Live Nation, but its stake in LN represents its sole live activities, while Eventbrite (EB) only floated at the tail end of 2018. Other smaller listed businesses include British virtual-reality company MelodyVR (EVRH), US live-streaming firm LiveXLive (LIVX) and Singapore-based promoter Unusual (UNU).
Interestingly, over $7bn (~85%) of the two-year growth was added in the first seven months of 2019 alone, with live businesses’ performance on the markets generally accelerating this year, despite economic uncertainty around issues like Brexit, the US-China trade war and looming recession in Germany.
“We hear a lot of talk about the ‘experience economy’, and these figures reflect that,” comments industry economist Chris Carey. “As the cultural shift towards experiences and moments, especially those with social capital, continues, live entertainment is well placed to capitalise.”
In the streaming sector, Carey also highlights the “smooth” initial public offering (IPO) by market leader Spotify, which undertook an unconventional ‘direct listing’ of its shares on the NYSE in early 2018. “It’s important not to overlook the success of the Spotify IPO,” he says.
“While it didn’t set the world alight, the smooth listing on the NY Stock Exchange bolstered the market’s confidence in music streaming, which in turn has driven share price growth for Vivendi.”
In more detail, here’s how each of the core seven stack up:
H1 2019 share price (market cap): $66.25 ($13.88bn)
H1 2017 share price (market cap): $34.80 ($7.16bn)
Two-year change: +90.37%
The value of Live Nation’s shares has grown at an astronomical rate over the past four half-year cycles, jumping from under $50 to over $70 in 2019 alone.
The live entertainment giant, which includes concerts, sponsorship and ticketing (Ticketmaster) divisions, posted its eighth consecutive record annual results in 2018, with revenue topping $1.7bn – and is on course to deliver more of the same, including a double-digit increase in operating income, according to CEO Michael Rapino.
Live Nation’s shares outperformed the S&P 500 index throughout the H1 2017–H1 2019 period, and Wall Street sentiment remains positive: according to the Motley Fool, a clear majority of analysts give LYV a ‘buy’ rating (indicating an undervalued stock).
“LN shares have gained more than 40% since August 2018, bolstered by positive analyst ratings and institutional investors”
H1 2019 share price (market cap): €40.92 (€3.93bn)
H1 2017 share price (market cap): €39.24 (€3.77bn)
Two-year change: +4.28%
CTS Eventim, the German ticketing and promotion powerhouse, saw its Börse Frankfurt-listed shares reach their highest price to date (€46.88) late last month, on the back of plans to acquire a significant stake in Fnac’s France Billet. Its market cap also climbed to a record €4.5bn.
Analysts are largely bullish on Eventim’s future growth potential, with MarketBeat listing five buys, two ‘holds’ and one ‘sell’, indicating a buy consensus, as of 14 August.
Eventim’s shares reached a record price in July, and analysts are bullish on its growth potential
H1 2019 share price (market cap): $279.94 ($6.65bn)
H1 2017 share price (market cap): $200.50 ($4.72bn)
Two-year change: +39.62%
New York-based Madison Square Garden Company, best known for its portfolio of US arenas and sports teams, made headlines in early 2018 when it revealed plans for its first international venue, in London, based on the spectacular MSG Sphere concept. The company has also diversified into esports, and has been identified as a key gaming-related stock.
Speaking during the company’s Q3 2019 earnings call, MSG CEO Jim Dolan hailed the “important progress” made with the MSG Sphere project in 2019, as well the impending spin-off of its sports business. “We remain confident that we are executing on a plan that positions us for long-term growth,” he told investors.
MSG stock has outperformed the S&P 500 consistently since March 2018, and holds a buy rating (seven buys and one hold) as of 13 August.
“We remain confident that we are executing on a plan that positions us for long-term growth”
H1 2019 share price (market cap): €4.27 (€78.57m)
H1 2017 share price (market cap): €2.48 (€45.63m)
Two-year change: +72.18%
While still small compared to the likes of CTS Eventim, Berlin-based DEAG, which celebrated its 40th anniversary in 2018, has grown its market capitalisation by nearly 75% since 2017, boosted by a string of acquisitions in Germany and the UK (the latter through promoter Kilimanjaro Live) and success in concerts, family entertainment and ticketing.
According to the company’s Q1 2019 earnings report, analysts monitoring DEAG stock give its shares a target price of between €5 and €7, with four buy ratings and one ‘outperform’ (ie a moderate buy).
DEAG has grown its market capitalisation by nearly 75% since 2017
H1 2019 share price (market cap): $1.31 ($88.2m)
H1 2017 share price (market cap): $1.52 ($106.14m)
Two-year change: -14.3%
On a constant-currency basis, Sao Paulo-based T4F Entretenimento has shrunk slightly in the past two years, reflecting economic uncertainty in many South American markets where it is active.
In its 2018 year-end financial statement, T4F CEO Fernando Alterio highlighted political turbulence and hyperinflation in Argentina and Brazil as negatively affecting demand for tickets, but noted that the company expects to return to “historical levels of activity” this year. Despite these challenges, T4F sold nearly two million tickets last year, for a net revenue of R$598 million ($148m).
Analysts, too, are confident: BTG Pactual, which gives Time 4 Fun stock a buy rating, in April set a price target of R$11 for its shares – more than double the R$5 it is today, and a price it hasn’t hit since early 2018.
T4F expects to return to “historical levels of activity” this year
H1 2019 share price (market cap): $27.43 ($33.78bn)
H1 2017 share price (market cap): $23.06 ($28.38bn)
Two-year change: +18.95%
Vivendi’s live (Olympia Production, U Live, festivals and venues in France and Africa) and ticketing (See Tickets, Digitick) businesses accounting for just under 0.9% of its revenue – €64m ($70.9m), of €7.35bn ($8.14bn), per its H1 2019 report – or around $54m of the French conglomerate’s two-year market cap growth.
With reports the company is planning a sell-off of up to 50% of Universal Music Group (H1 2019 revenue: $3.3bn), including 10% to China’s Tencent, expect that percentage to increase in years to come.
“It will be interesting to see how the global live companies engage with emerging markets”
H1 2019 share price (market cap): $39.50 ($34.43bn)
H1 2017 share price (market cap): $35.31 ($38.22bn)
Two-year change: –11.87%
As per eBay’s 2018 annual report, StubHub’s net transaction revenues were $1.1bn, out of $8.485bn total, the secondary ticket marketplace accounting for around an eighth of eBay group turnover.
That puts StubHub’s share of the $3.79bn wiped off eBay’s market cap over the past two years at just shy of $500m, though eBay Inc.’s share price is actually up by about 40% this year, more than double the S&P 500 Index – albeit largely in response to rumours it plans to offload StubHub, a move advocated by many activist investors.
Looking to the future, adds Carey, market-watchers should also keep an eye on the growth potential of developing countries. “It will be interesting to see how the global live companies engage with emerging markets,” he concludes.
“I’d anticipate an increase in activity within those geographies, but also a growth in talent from those markets being exploited in the established markets, too.”
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