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“Bring on the Roaring ’20s”: $97 target for LN stock

Financial research firm Wolfe Research has begun coverage of Live Nation, assigning the company’s stock an ‘outperform’ (ie strong buy) rating ahead of the resumption of live entertainment activity later this year.

In an announcement, titled ‘LYV: Bring on the Roaring 20s – Initiate with Outperform’, that the company is initiating coverage of Live Nation stocks (which trade on the New York Stock Exchange under the symbol LYV), Wolfe analyst John Janedis says the promoter is “poised for a multi-year cycle of strong growth as the reopening accelerates for a business that will have the tailwind of favourable supply/demand and a structurally stronger margin profile coming out of the pandemic”.

“LN will have the tailwind of favourable supply/demand and a structurally stronger margin profile coming out of the pandemic”

Channelling Marc Geiger in predicting a second “roaring twenties” for live entertainment, Janedis says he also sees Live Nation growing its already dominant market share post-Covid-19 “given its scale and vertical positioning within live entertainment”.

Wolfe has given Live Nation shares a price target of US$97 by the end of 2021. At press time, LYV stocks were worth $85.80; they reached an all-time high of $92.86 on 1 March.

Other analysts covering Live Nation stock include JP Morgan, William Blair, Morgan Stanley and Northcoast Research.

 


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Live Nation’s share price reaches all-time high

The share price of live entertainment behemoth Live Nation has scaled new heights this week, despite the fact the vast majority of live shows have not been able to take place for the past 10 months.

On Tuesday (19 January), Live Nation’s share price hit an all-time high of US$76.54 – which has more than doubled since its slump to $29.50 in March last year, amid the cancellations and postponements of live shows.

The record-high share price comes after the company acquired a majority stake in Veeps, a ticketed livestreaming platform developed by Good Charlotte’s Joel and Benji Madden.

Veeps is Live Nation’s first major acquisition since the pre-Covid-19 era and a strong indication that livestreamed concerts are here to stay.

Live Nation’s share price hit an all-time high of $76.54 after the live entertainment giant acquired a majority stake in Veeps

“Livestreaming is a great complement to our core business, and essentially gives any show an unlimited capacity,” said Live Nation CEO, Michael Rapino.

“Looking to the future, live streams will continue to unlock access for fans – whether they are tuning into a sold-out show in their hometown, or watching their favourite artist play in a city halfway around the world. The most critical element of live streaming is the artist on stage, and with Live Nation’s unmatched inventory feeding into Veeps, together we will help fans enjoy more live music than ever before.”

Live Nation’s stock has steadily climbed after its 52-week low in March 2020, with the company offering drive-in shows, live streams, and new content through its Live From Home virtual music hub throughout the pandemic.

In November last year, following early results from the world’s first effective coronavirus vaccine, Live Nation share price soared by 22%.

Prior to that, Live Nation-owned Ticketmaster unveiled SmartEvent, a new suite of technology will equip event organisers to meet the evolving needs of capacity, distancing and other logistics.

Live Nation’s share price stood at $74.59 yesterday (21 January).

 


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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 cuts staff by 45% in $100m cost-saving plan

Event management and ticketing company Eventbrite is laying of 45% of its staff – reportedly between 450 and 500 people – as it implements widespread cost-saving measures.

The workforce reduction was announced as part of a cost-cutting plan, with the company looking to reduce annual expenses by at least $100 million.

The move follows layoffs at other companies in the entertainment industry, including Paradigm and WME parent company Endeavor.

Eventbrite expects to spend between $7m and $10m in severance payments, with an additional $3 to $4m in charges related to facilities and fixed assets.

Reports suggest that Eventbrite’s music division has been particularly affected by the cuts.

“The Covid-19 pandemic has caused massive disruption to the live entertainment and experiences economy and we are taking significant action to navigate this unprecedented time,” says Eventbrite co-founder and CEO Julia Hartz.

“The Covid-19 pandemic has caused massive disruption to live entertainment and we are taking significant action to navigate this unprecedented time”

“We are saddened to see many members of our team depart the company and we are supporting them in every way we possibly can during this tumultuous time. I want to personally thank our talented and dedicated teammates for contributing towards building the leading platform for independent creators.”

Eventbrite shares (EB) have dropped by just over 66% since the end of February, falling from $21.76 to $7.36. The company’s share price rose by more than 10% during trading yesterday (8 March), following the news of layoffs.

Shares in Eventbrite have been in decline since March 2019, as the company continued to work on the integration of ticketing platform Ticketfly, which it acquired in 2017 for $200m.

The company’s 2019 financial report saw net revenue increase by 12% from the year before to $327m and losses of $69m, an increase of over $6m from 2018.

Photo: Stefan Wieland/Wikimedia Commons (CC BY-SA 3.0) (cropped)

 


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CTS and Live Nation shares rally

The stock market reaction to the coronavirus has been dramatic and at times immediate over the last four weeks, but after share prices of the big entertainment companies dipped over 60% in recent week, stocks are now rallying.

The experience economy has been one of the hardest hit since the Covid-19 crisis began, and after 2019 underlined the prosperity of live entertainment in general, it’s a year that may be the overall benchmark of success for some time.

But with most governments announcing extensive support programmes, the share prices of CTS Eventim (EVD) and Live Nation (LYV) are now starting to recover (the former which closed yesterday at €38.22, up from €27.54 on 18 March). And this reaction is further backed by analysts’ estimates.

Christoph Bast, analyst at Bankhaus Lampe entitled his recent research report ‘Out of The Dark’. In a “new base scenario”, Bast said “expect a decline in online tickets by 52% in 2020 and the cancellation or postponement of most of the concerts scheduled for 2020.” He predicts that, “once this crisis is over, CTS Eventim should see a strong concert season in 2021.”

Bast’s previous ‘sell’ rating has changed to ‘buy’ with a redefined price target of €43, compared to €45 before the crisis. Bast’s research is similar to estimates by other analysts, which largely see the ongoing business year as a sabbatical, being back on track in 2021.

With most governments announcing extensive support programmes, the share prices of CTS Eventim and Live Nation are now starting to recover

Rating agencies Moody’s and S&P are more concerned about the current situation of Live Nation, with both agencies adjusting their ratings. Moody’s downgraded its rating to BA3 which details that: “Obligations rated BA are judged to have speculative elements and subject to substantial credit risk”, while 3 stands for: “Issuers rated Prime-3 have an acceptable ability to repay short-term obligations.”

S&P last week declared it was scrutinising its rating for Live Nation as well as for Endeavor (WME’s parent company). Endeavor has long terms debts of $4.6 billion on its books, while Live Nation filed a debt of $3.4bn in its 2019 annual report, up from $2.9bn in 2018.

Published on 24 March, a research report on Live Nation by analyst Jason Bazinet at Citigroup changed the stock from ‘sell’ to ‘neutral’ and set a price target of $35. By close of play yesterday (26 March) Live Nation’s share price had risen to $45.90, a substantial climb given that it had dipped to $21.70 on 18 March.

Ongoing concerns for many analysts now sits around cashflow for a sector that is currently in limbo. And while the likes of Live Nation and CTS Eventim may have more options to restructure credit lines currently, the ability to weather the current situation with enough reserves in the bank affects both mid-sized and small operations alike.

Photo: QuoteInspector.com (CC BY-ND 2.0) (cropped)

 


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Liberty repays $130m loan, avoids LN stock sale

Liberty Media Corporation has repaid a £130 million margin loan to Live Nation, preventing any sale of its stock in the company.

Liberty, which owns almost 70 million shares in Live Nation, around 34% of the company, states that the payment means “there are no margin or other price triggers that could require a sale of the underlying stock.”

Following the repayment, Live Nation’s share price rose 11%, with the company’s market cap sitting at $7.06 billion.

Liberty, which is led by Live Nation chairman Greg Maffei, holds majority shares in satellite radio giant SiriusXM. The company acquired internet radio, streaming service Pandora Media in 2018 and motorsport series Formula 1 in 2016.

“There are no margin or other price triggers that could require a sale of the underlying stock”

Share prices of all major live entertainment companies have taken a hit in the past few weeks as the spread of Covid-19 continues to cause government-imposed lockdowns, event bans and tour and festival postponements across the world.

Both Live Nation and German live events giant CTS Eventim have seen their price dip by over 40% in the last two weeks due to fears around the virus. Like Live Nation, Eventim has experienced a rebound in the past day, with its share price rising by almost 10%.

The S&P 500 index, a measure of the stock performance of 500 large companies listed on US stock exchanges, has fallen by 29% in the last month. The index inched up by less than 1% following trading yesterday.

 


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Live stocks hit as coronavirus batters markets

The major publicly traded live entertainment companies have seen the value of their shares decline this week, as stock markets around the world reel from fears over the impact of the Covid-19 coronavirus.

Markets in Europe, Asia and the Americas are suffering their worst week since the global financial crisis of 2008, according to the BBC, with the spread of coronavirus affecting both the global supply chain and consumer demand.

Live Nation CEO Michael Rapino referred to the “resilience” of music fans in the company’s earnings call yesterday (27 February), stating that consumers are still buying tickets worldwide, despite the ongoing spread of Covid-19.

The company’s share price, which reached an all-time high of US$76.08 earlier this month, has fallen by 20% in the past few days, in keeping with the global stock market drop. Shares are back up 2% today, following the publication of strong 2019 financial results.

Shares for German ticketing and promotion powerhouse CTS Eventim have taken a similar hit, falling by just under 20% since last week. Eventim shares reached a record high of €61.30 ($67.27) on 24 January 2020.

“We’re confident that, long-term, the show will happen”

Fellow German company Deutsche Entertainment AG (DEAG), whose shares have climbed almost 30% to €6.30 ($6.92) since mid January, has seen a 22% drop since last week, whereas shares for New York-based Madison Square Garden Company (MSG) have decreased by around 17% in the past week, falling to $261.34.

In Latin America, Sao Paulo-based Time 4 Fun’s shares are also down 22%, from BRL5.41 ($1.20) to BRL4.24 ($0.94). Brazil recorded its first case of coronavirus on Wednesday, marking the virus’ arrival to Latin America.

It is not just live entertainment companies that have suffered in the wake of coronavirus. The S&P 500 index, a measure of the stock performance of 500 large companies listed on US stock exchanges, has fallen 15% from the record high it achieved just last week.

Although coronavirus has already caused the cancellations of thousands of shows across Asia and Europe, not all are worried about the long-term impact. “We’re confident that, long-term, the show will happen,” says Rapino. “The revenue will flow and the fan will show up.”

 


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Live Nation shares up 10% post DOJ settlement

Live Nation’s share price rose by US$6.79 to $70.60 yesterday (Thursday 19 December) following news that it had reached a settlement with the US Department of Justice (DOJ) over antitrust allegations.

The DOJ had opened investigations into Live Nation last Friday over concerns that the company had violated the terms of a decree governing its 2010 merger with Ticketmaster.

Both Live Nation and Ticketmaster refuted all allegations of anti-competitive practice.

As part of the settlement, the DOJ is extending and modifying the decree that permits the merger, and which was set to expire next year, until 2025. The justice department calls the agreement the “most significant enforcement action of an antitrust decree in 20 years”.

Following the news, Live Nation’s stock, which had dropped to around $64 per share following news of the DOJ investigation, rebounded to the levels it had been trading at before, jumping almost 10% to just over $70. Shares remained up at $69.83 at the time of writing.

“We believe this is the best outcome for our business, clients and shareholders as we turn our focus to 2020 initiatives”

“We have reached an agreement in principle with the Department of Justice to extend and clarify the consent decree,” comments a Live Nation spokesperson. “We believe this is the best outcome for our business, clients and shareholders as we turn our focus to 2020 initiatives.”

Under the terms of the modified agreement, Live Nation is prohibited from pressuring venues to use Ticketmaster and from withholding shows from a venue if it chooses to go with another ticketer. An independent party will monitor Live Nation’s compliance with the decree, and a $1 million fine will be levied for any violation of the agreement.

“When Live Nation and Ticketmaster merged in 2010, the Department of Justice and the federal court imposed conditions on the company in order to preserve and promote ticketing competition,” says assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.

“Today’s enforcement action including the addition of language on retaliation and conditioning will ensure that American consumers get the benefit of the bargain that the United States and Live Nation agreed to in 2010. Merging parties will be held to their promises and the Department will not tolerate transgressions that hurt the American consumer.”

The full DOJ statement can be read here.

 


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CTS Eventim shares up 60% in 2019

German entertainment behemoth CTS Eventim has enjoyed a profitable 2019 so far, with the creation of promoter network Eventim Live and expansion of online ticket sales driving “significant growth” in live entertainment and ticketing respectively.

The company’s share price has risen by 61.5% since January, climbing from €33.8 to to €54.6, following a “successful” first half of the year and strong third quarter results. Earlier this month, Eventim traded at an all-time high of €55.5.

At the time of writing, the company’s market capitalisation sat at €5.2 billion, a significant increase from the €3.9bn recorded in the first half of 2019, indicating an acceleration of growth as the year has progressed.

Group revenue surpassed €1bn for the first time in a nine-month period, up 16.5% from the same period in 2018 to €1.1bn. Normalised EBITDA (earnings before interest, tax, depreciation and amortisation) also saw an increase from the previous year, rising 26.5% to €177m.

According to Eventim CEO Klaus-Peter Schulenberg, the company has “significantly improved” its online ticketing volume in 2019. The company has sold 36.8m tickets through its online channels so far this year – a 9.2% increase year-on-year – which has helped drive ticketing revenue up by 11% to €306.9m.

“Our aim is to offer international tour opportunities to artists from all over the world”

Schulenberg adds that the increasing number of tickets sales through digital channels “has positive and long-term impacts” for the company.

Live entertainment revenue “exceeded expectations” rising 19% to €781.4m, whereas normalised EBITDA grew “disproportionately” by 52.7% from the first nine months of 2018, reaching €57.8m. Eventim puts the growth down to “major tours” put on by Eventim Live promoters in Germany, as well as by newly acquired promoters abroad.

Russian promoter Talent Concert International (TCI) was the most recent addition to the pan-European promoter network, with Austria’s Barracuda Music potentially joining in the near future.

“CTS Eventim is on course to achieve the targets for the 2019 financial year,” comments Schulenberg. “The establishment of our promoter network, Eventim Live, is opening up additional avenues for us in the [live entertainment] field. Our aim is to offer international tour opportunities to artists from all over the world.”

The CTS boss adds that “by taking a stake in France’s market leader, France Billet, we have also achieved a major and strategic step forward in the ticketing segment. In this way, CTS Eventim is extending and reinforcing its market position in a commercially attractive and culturally diversified market.”

Read IQ‘s anniversary feature on 30 years of CTS Eventim below.

Deutsche Courage: The rise and rise of CTS Eventim


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CAA to perform $393m employee share buyback

Amid a backdrop of postponed initial public offerings, Creative Artists Agency (CAA) is reportedly looking to repurchase employees’ equity, as an alternative method of improving liquidity.

As first detailed in the Hollywood Reporter, LA-based talent agency CAA is in the process of raising US$393 million in order to buy stakes held by its agents and executives.

It is believed that the agency is looking to borrow $1.15 billion in a seven-year loan to refinance at a more favourable interest rate of $757. The remaining $393m would be used to fund the buyback of shares from a number of employees.

Many of the stakeholders, who make up only a select group of senior employees, are understood to have bought shares when private equity fund TPG became majority owner in 2014.

The deal would allow CAA to cash out equity while avoiding an IPO. Endeavor, the parent company of fellow talent agency WME, recently put plans for its own IPO on hold, after receiving a lukewarm reception from investors.

Other companies recently attempting IPOs have met similar fates. Office rental company WeWork halted plans following concerns from investors, whereas shares of static exercise bike business Peloton plummeted 11% upon close of its first day of public trading.

Arrangers of the CAA deal include current majority stakeholder TPG, along with Bank of America, Credit Suisse and UBS.

 


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