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Public live cos add nearly $6bn since March crash

The main publicly listed live entertainment companies have added US$5.75 billion – or nearly $1bn a month – to their collective value since the worst of the Covid-19-induced stock-market crash in March, new analysis reveals.

Combining the market capitalisations of Live Nation, CTS Eventim, DEAG, Time for Fun and Eventbrite, as well as a relevant percentage of Vivendi’s business, shows the six companies were worth nearly $6bn more on 21 September than 20 March, in spite of the six-month-and-counting shutdown of nearly all live experiences.

As in previous IQ coverage of live music’s (pre-coronavirus) stock-market performance, Live Nation Entertainment – the world’s biggest live entertainment business – is the biggest mover, growing its market cap by nearly 60% in the period analysed.

Worth $7.29bn on 20 March, with a share price of $33.97, Live Nation (LYV)’s market cap stood at $11.55bn six months later, with most financial analysts confident the concert behemoth will bounce back strongly post-pandemic. As of 9 September, of the 12 firms covering Live Nation stock, seven have assigned it a ‘buy’ rating, one a ‘strong buy’ and one a ‘hold’, with none recommending a ‘sell’.

While the recovery of Live Nation – which has made an estimated $600m in savings this year, believed to include widespread redundancies globally – is impressive, five of the six businesses included have rebounded strongly over the last six months, with only DEAG shares having declined in price as of 21 September.

Berlin-based Deustche Entertainment AG (LOUD), which trades on Frankfurt’s Xetra exchange, had around $11 million (€9.4m) shaved off its market cap after the value of its stocks fell from €3.48 on 20 March to exactly €3 on 21 September. As of the latter date, DEAG’s market capitalisation was €58.9m ($68.9m), down around 14% on €68.3m ($79.9m) six months previous.

Live Nation is the biggest mover, growing its market cap by nearly 60% in the period analysed

Yet DEAG stock, too, is strongly rated by market watchers: analysts’ ratings similarly lean heavily towards a ‘buy’, with even the most pessimistic financial observers giving the company’s stock a price target of €3.50 in the short term (while noting that DEAG should “return to pre-corona levels” by 2022).

Of the other four businesses, another German company, public pan-European concert and ticketing giant CTS Eventim, was the stand-out performer, growing its market cap more than $1bn by adding nearly €10 to its share price.

Compared to 20 March, when its share price was €31.78 and market cap €3.05bn, CTS Eventim (EVD) shares traded at €41.14 six months later, giving the company a market capitalisation of €3.95bn at the time of writing.

Brazil’s Time for Fun/T4F Entertainment (SHOW3) – the largest promoter in South America – has seen its value increase 42%, from R$131m ($23.8m) to R$186.1m ($33.8m), while US-based self-service and club ticketing specialist Eventbrite (EB) is up 61%, growing its market cap from $649.2m to $1.06bn in the same period.

French media conglomerate Vivendi (VIV), meanwhile, has seen its market cap rise from an estimated €20.9bn in March to €26.38bn on 21 September. The company’s Vivendi Village unit – which incorporates its live (Olympia Production, U Live, festivals and venues in France and Africa) and ticketing (See Tickets, Starticket, Paylogic) businesses – accounts for some 0.34% of the business: €26m in revenue, of €7.58bn total, per its H1 2020 report.

Many outside observers agree live music’s recovery will be complete by 2022

While it should be noted the industry is far from back to its pre-Covid-19 value – Live Nation stocks were once worth nearly $75, while Eventim shares hit a high of €60 in January – the rally bodes well for a sector often described as the first to close and last to reopen, and which has been hit particularly hard by the impact of the virus.

Additionally, the live music industry welcomed two newly public businesses – MSG Entertainment, spun off from the Madison Square Garden Company, and Warner Music Live/Umbrella Artists owner Warner Music Group, which floated in April and June, respectively – in the same period, and which would likely have pushed the $5.75bn figure even higher were those companies trading in March.

With so-called second lockdowns looming in many territories, it remains unclear how global markets will perform in the months ahead, as well as the effects, positive or otherwise, any volatility will have on live music stocks.

One thing, however, many outside observers seem to agree on is that live music’s recovery will be complete by 2022.

As IQ revealed earlier this month, financial consulting firm PricewaterhouseCoopers (PwC) is predicting a complete recovery by 2022, with the value of the live music market (public and private) set to reach $29.3bn – over $300m more than 2019’s $28.97bn – that year, while investment bank Goldman Sachs is similarly bullish, with its head of European media research, Lisa Yang, also heralding a return to normal in 2022.

Read PwC’s live music growth predictions here:

Live music down 64% this year – but will rebound in 2021


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Eventbrite investors settle lawsuit over shares drop

Aggrieved Eventbrite investors have agreed to settle a lawsuit they filed against the ticketing company, given the current issues facing the live entertainment sector due to Covid-19.

Last year, the shareholders alleged that the company made misleading statements at the time of the company’s initial public offering (IPO) in September 2018, following the impact of the Ticketfly integration and subsequent decline in Eventbrite stock.

The lawsuit alleged that Eventbrite misled potential buyers in its IPO registration statement which declared that the acquisition of ticketing platform Ticketfly “had a positive impact” on net revenue growth” in the third quarter of 2017.

The claimants also stated that the company failed to disclose that, at the time of IPO, the Ticketfly migration was progressing more slowly than stated, therefore delaying integration and negatively impacting growth.

The claimants purchased Eventbrite stock in the company’s IPO at US$23 a share which started declining on 7 March 2019, upon the release of Eventbrite’s annual financial results and the admission that the Ticketfly integration “will impact revenues in the short-term”. The share price continued to drop.

“With the company’s future uncertain, the prospect that settlement class members would recover anything looked dim”

The investors filed for damages with a class-action lawsuit but have recently negotiated a $1.9 million settlement, noting that the challenges faced by Eventbrite as a result of Covid-19 reduced the prospect of a better pay-out down the line, according to Law360.

They also noted that similar litigation against Eventbrite in the Californian state courts had also been dismissed, reducing chances of winning the lawsuit.

Their legal counsel told the judge: “Dimming the prospects of any recovery, during litigation, the world was struck by the worst pandemic it suffered since 1918 – particularly bad news for a company whose business is helping customers plan live events”.

“With claims against Eventbrite dismissed in state and federal court”, they went on, “and the company’s future uncertain, the prospect that settlement class members would recover anything looked dim. Yet, lead counsel nonetheless were able to negotiate the $1.9 million settlement”.

And while a lower sum than originally hoped, that cash “will nonetheless prove meaningful for settlement class members”.

Eventbrite recently released its earnings report for the second fiscal quarter of 2020, with net revenue for the period dropping more than 90%.  The report also revealed that the company’s net revenue was just $8.4 million for the quarter, down from $80.8 million in Q2 2019.

For the same period, Eventbrite chalked up a $38.6 million net loss, up sharply from the $14.8 million loss from the previous year. Eventbrite also reported that their advanced payout balance is now $244 million, reduced by $111 million since March.

 


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Eventbrite faces lawsuit in fallout from shares drop

Eventbrite shareholders are taking a class action lawsuit against the ticketing and events company, alleging they were misled at the time of the company’s initial public offering (IPO) in September 2018.

International securities and consumer rights litigation firm Scott+Scott Attorneys at Law LLP filed the lawsuit on behalf of claimants who purchased Eventbrite stock in the company’s IPO at US$23 a share.

The lawsuit alleges that Eventbrite misled potential buyers in its IPO registration statement, declaring that the acquisition of ticketing platform Ticketfly “had a positive impact” on net revenue growth” in the third quarter of 2017.

The claimants also state that the company failed to disclose that, at the time of IPO, the Ticketfly migration was progressing more slowly than stated, therefore delaying integration and negatively impacting growth.

Eventbrite shares have dropped more than 50%, from over $32 to almost $16, in the past three months.

The lawsuit alleges that Eventbrite misled potential buyers in its IPO registration statement

Shares first declined on 7 March 2019, upon the release of Eventbrite’s annual financial results and the admission that the Ticketfly integration “will impact revenues in the short-term”. Shares then dropped further, to $17, in May following a weaker-than-expected financial start to 2019.

At the end of May, Eventbrite Music president and Ticketfly co-founder Andrew Dreskin stepped down from his role to transition to an advisory position.

The company’s shares remain down at $15.74, at the time of publishing (6 June).

Eventbrite declined to comment.

The lawsuit is not the first that Eventbrite has faced in relation to Ticketfly. Claimants attempted to sue the company following a Ticketfly hack in May 2018, alleging that “lax cybersecurity procedures” allowed hackers to gain access to 27 million customers’ personal data.

An Illinois judge dismissed the case earlier this week. The claimants have until 9 June to file an amended complaint.

 


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Investigation into takeover of ‘undervalued’ Cvent

The takeover of event-management software developer Cvent is under investigation over potential wrongdoing.

Cvent, which develops software for event planners, including solutions for online event registration, venue selection and event marketing, was acquired by private-equity firm Vista Equity Partners on 18 April for US$30 per share, or about US$1.65 billion.

Cvent stockholders will receive $36.00 in cash per share.

Many market analysts see this figure as being too low – one predicted a high target price for Cvent stock (CVT) of $43 per share, and Cvent shares traded in the open market as high as $37.25 per share on 8 December 2015 – leading one law firm to launch a formal investigation into whether the offer from Vista gives Cvent shareholders a fair return.

The investigation will centre on the unnamed law firm will investigate whether Cvent’s board maximised shareholder value by negotiating the best price and acted in the shareholders’ best interests in connection with the proposed sale

More specifically, the unnamed law firm will investigate whether Cvent’s board of directors undertook “an adequate sales process, adequately shopped the company before entering into the transaction, maximised shareholder value by negotiating the best price and acted in the shareholders’ best interests in connection with the proposed sale”.

The $36 offered is, however, a 69 per cent premium over the company’s closing price of $21.30 on the trading day prior to the acquisition, Friday 15 April.

Earlier this week Cvent CEO Reggie Aggarwal said his company stood to benefit greatly from the acquisition. “With Vista’s financial strength to invest in Cvent now and in the future, we will be better positioned to deliver innovative solutions that transform the meetings and events industry, and to offer employees new opportunities for career growth,” he commented.