Stock Update: Eventbrite

Stock Update: Eventbrite

We are long-term investors here at MyWallSt and recommend companies that we believe will have consistent growth for years to come. Updates are an opportunity for us to reaffirm our stance on a company while keeping you up to date on its developments. By renewing our comments with the latest information, we ensure that investors have confidence in our selections, regardless of their start date.

Back in January of 2020, myself and my friends booked tickets to a Taylor Swift-themed club night called Swiftogeddon. Due to another form of armageddon, we never got to go but that's not the point of this story. The event was taking place in a club with a small capacity, under 500 people, so there was only one place to buy tickets: Eventbrite.

Eventbrite is a staple of the small event industry, providing ticketing, marketing, and analytics tools to artists, teachers, and organizers across the globe. In its eyes, no event is too small and that has allowed it to dominate a market segment left behind by big players like Ticketmaster. For this reason, Eventbrite has an ever-growing number of creators, rather than a few headliners, and hopes to empower these one-man shows to effectively find their audience. Their love for this community is clear. If you ever open one of their shareholder letters, it begins with a profile and photo shoot from a featured creator — highlights include the Social Dog Company and the London Drawing Group. However, over the last several quarters, the company has understandably struggled in the wake of COVID-19.

Even prior to social distancing and stay-at-home orders, the brand was undergoing a period of restructuring. Paid ticket growth, the most important metric for revenue, had slowed so the company made a number of strategic investments to increase small business onboarding and move the brand further into the lucrative, live-music space. While these measures were beginning to bear fruit at the end of 2019, lockdown placed the entire industry on an indefinite pause. Consequently, Eventbrite was left to cut expenses, pause hiring, and eventually seek additional funding in April of 2020. In spite of this, Eventbrite didn't abandon its community, instead it made tools to improve remote event planning and helped creators expand their marketing to capture customers outside their neighborhood, state, and even country. One of the benefits of remote events: the entire world can be your audience. While this generated some revenue, it is not a replacement for the scale or popularity of live events so Eventbrite is lying in wait, even if investors have already jumped the gun.

While the company's balance sheet has improved significantly since its abysmal results of August 2020, its latest quarter still showed revenue down 51% year-over-year. Despite this, investors have already propelled the stock back to its pre-pandemic levels. While Eventbrite has made enhancements to its platform in anticipation of a frantic post-pandemic event scene, CFO Lanny Baker states the company does not expect any upswing in live events until the end of 2021. The scale of these events, and therefore ticket sales, will also most likely be pared back while countries gradually reopen.

That being said, when the sector does eventually get the all clear, the return may be fast and furious in favor of Eventbrite. In Australia, where lockdown measures have already been eased, Eventbrite's paid ticket sales rapidly returned to 87% of their year-earlier levels. Significantly, most of these tickets were sold to small, local events that occurred within 45 days of being published on the platform. This may give Eventbrite the edge over Ticketmaster in the early post-pandemic days as it is more equipped to handle quick turnaround times and local events.

While Eventbrite's current valuation is steep for its condition, this can undoubtedly be attributed to investors' hopes for the post-COVID world. And maybe the world will eventually catch up to the valuation — Taylor Swift put out two new albums during lockdown so the demand for Swiftogeddon will be greater than ever. 

In light of Eventbrite's handling of the pandemic, we have updated our comments on the stock. To view them, click on the button below. 

Anne MarieAnne Marie

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