Ticketmaster parent Live Nation Entertainment Inc. on Thursday said the concert industry is still on a tear following last year’s massive rebound. But on Friday, at least, investors weren’t buying it.
Live Nation shares LYV,
William Blair analyst Ryan Sundby, in a research note on Friday, said that “concerns seem to center on the idea that 2022 could represent peak earnings power as a ‘reopening play.’”
But he said that “we would caution investors against lumping Live Nation in alongside other companies that have benefited from a COVID related lift in pent-up spending given the global opportunity to continue to unlock latent demand and drive higher ancillary spending.”
However, LightShed Partners analyst Brandon Ross also told Barron’s that the stock, at the moment, suffered from a “massive regulatory overhang.” But he said the stock could move higher once that overhang lifts.
Live Nation on Thursday said it finished 2022 with sales up 44% to $16.7 billion — by far its best ever. Its fourth-quarter sales were better than expected, although it also lost more per share than what FactSet forecasts called for.
However, executives said there was “no sign of any slowdown” in demand for 2023. And as rising prices — including for concert tickets — cut into consumer savings, they said that “fans continue to prioritize concerts.”
Still, during the company’s earnings call, executives spent a lot of time fielding questions about friction with regulators, following Ticketmaster’s implosion last year during a pre-sale of Taylor Swift concert tickets and allegations of cramming “junk fees” into sales. Live Nation’s Chief Financial Officer, Joe Berchtold, faced further questions about Ticketmaster’s hold over the concert industry from lawmakers last month, and blamed the pre-sale debacle on a deluge of bot traffic.
Berchtold, during Thursday’s call, said venues continued to work with Live Nation because “we have the best software platform for them.” And Chief Executive Michael Rapino insisted that “the ticketing industry is more competitive than ever, and our market share has gone down, not up,” since Live Nation’s merger with Ticketmaster in 2010.
“Because of the competitive bidding process, venues regularly take more of the economics on every renewal, as they set and keep a majority of the service fees,” he said.
Live Nation owns, operates, or has a stake in 338 venues around the world. Executives, during the call, said they planned a bigger push up ahead to improve their reputation. They also expressed support for legislation that, they said, would allow artists to decide resale rules, ban speculative tickets and crack down on bot activity, among other things.
“I think we’ve been too passive in our approach on how we need to educate and act,” Rapino said during the call. “This week was the start of where we’re going to start moving. You’re going to see us lean forward a lot more on education, reform.”
Those remarks are likely to be met with skepticism, as the concert industry’s comeback disproportionately rewards bigger artists, bigger venues and bigger companies, while smaller artists struggle with equipment and transportation shortages, the pandemic and higher costs.
For some on Wall Street, though, the results and the executives’ remarks on the call were enough.
“Overall, we see the quarter as easing investor concerns related to the economy and regulatory, and see room for shares to re-rate higher as confidence is gained on these points,” JPMorgan analysts said.
Following Friday’s move lower, Live Nation stock is down 44.7% over the past 12 months. The S&P 500 index SPX,