On Thursday, Canaccord Genuity adjusted its price target for Vivid Seats Inc. (NASDAQ: SEAT), decreasing it to $6.00 from the previous $7.00, while maintaining a Buy rating on the stock. The adjustment follows the company's release of mixed third-quarter results, which saw marketplace Gross Order Value (GOV) surpass Canaccord's recently revised estimates, yet still decline by a low double-digit percentage year-over-year (y/y).
Vivid Seats' revenue experienced a marginal 1% y/y drop, an outcome attributed to a higher take rate as the company continues to focus on unit economics. Meanwhile, adjusted EBITDA margins stayed in the high-teens, showing a slight y/y improvement. Despite facing what are believed to be temporary market supply challenges, including a significant decrease in stadium tours by A-list performers in 2024 compared to 2023, Vivid Seats has seen resilient volumes, bolstered by the strength in tours at smaller venues.
The company's third-quarter was also marked by a difficult marketing environment, as competitors emphasized volume growth. Although management had previously been optimistic about the concert supply for 2025 based on industry comments, this has not yet resulted in a more robust concert lineup for the upcoming year. Consequently, Vivid has lowered its full-year 2024 outlook across all metrics, with the revised guidance suggesting a y/y decrease in fourth-quarter GOV ranging between 1% and 19%.
Vivid Seats' shares have faced downward pressure following the earnings report, now showing a decline of over 35% year-to-date (YTD). The company's commentary indicates that while the outlook for 2025 remains uncertain, given positive signals from Live Nation, consistent strength in Vivid's margins, and a valuation that is considered undemanding at approximately 1.5 times FY25 revenue and 7 times EBITDA, there is a belief that the stock may be approaching a low point in terms of investor sentiment.
In other recent news, Vivid Seats Inc. has undergone significant board changes to comply with Nasdaq's corporate governance requirements. The company announced the appointment of Adam Stewart, a Vice President at Google (NASDAQ:GOOGL), to its Board of Directors and the Nominating and Corporate Governance Committee, effective November 1, 2024. This coincides with the departure of Tom Ehrhart from the board, marking the company's transition to a majority independent board.
In the realm of financials, Vivid Seats projects revenues between $810 million and $830 million, with adjusted EBITDA ranging from $160 million to $170 million. The company's Q1 2024 financial results reported over $1 billion in Gross Order Value (GOV), $191 million in revenues, and $39 million in adjusted EBITDA.
Several analysts, including DA Davidson, Canaccord Genuity, Craig-Hallum, and Benchmark, have adjusted their price targets for Vivid Seats while maintaining a Buy rating. Despite a slowdown in live events and a scarcity of major A-list events, analysts remain optimistic about the company's 2025 outlook, anticipating a significant sequential improvement in business.
Finally, Vivid Seats has announced a multi-year media collaboration with I Am Athlete (IAA), emphasizing the company's commitment to offering unique fan engagement opportunities. These recent developments highlight the dynamic environment within which Vivid Seats operates.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Vivid Seats' financial position and market performance. Despite the challenges outlined in the article, the company maintains a P/E ratio of 13.2 based on the last twelve months as of Q2 2024, suggesting that investors are still willing to pay a premium for the company's earnings. This is further supported by the company's strong revenue growth of 19.65% over the same period, indicating that Vivid Seats continues to expand its business despite market headwinds.
InvestingPro Tips highlight that Vivid Seats has been profitable over the last twelve months and analysts predict the company will remain profitable this year. This aligns with the article's mention of resilient volumes and the company's focus on unit economics. Additionally, the stock has shown a strong return over the last month, with a 16.1% price increase, potentially indicating a shift in investor sentiment or a reaction to the company's strategic adjustments.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Vivid Seats' financial health and market position.
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