Live Nation Entertainment, Inc. LYV is benefiting from pent-up demand for live events and robust ticket sales, reflecting strong contributions from all its operational segments. Also, the performance growth of Ticketmaster added to its uptrend.
Recently, LYV reported impressive first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate by 44.4% and 39.6%, respectively. Also, the top and bottom lines grew year over year by 73% and 35.9%, respectively. The upside was attributable to the robust performance of Ticketmaster and an increase in fan spending. In first-quarter 2023, 19 million fans attended shows across 45 countries and more than 145 million tickets were sold.
LYV has a trailing four-quarter earnings surprise of 21%, on average. Moreover, the company has a strong VGM Score of A, backed by a Value Score of B and a Growth Score of A.
However, this live entertainment company is facing headwinds in the form of high costs and expenses.
Earnings estimates for 2023 have moved south to 40 cents per share from 59 cents per share over the past 30 days. This depicts analysts' concern over the company’s growth prospects.
Let’s discuss the factors broadly.
Live Nation is witnessing growth thanks to pent-up demand for live events and robust ticket sales. The company said that after the pandemic, demand for concerts remains high. Year to date, the company has already sold more than 90 million tickets, which rose more than 20% from the same period in 2022.
In the first quarter of 2023, the Concert segment’s revenues totaled $2,281.2 million, up 89% year over year. Also, total estimated events increased to 19,509, up from the prior year’s 10,898 events. In the quarter, the Ticketing segment’s revenues amounted to $677.7 million, up 41% from the prior-year quarter, and the total estimated tickets sold rose to 145,779,000.
LYV witnessed increased demand for digital ticketing post-pandemic, reflecting the robust performance of Ticketmaster. In first-quarter 2023, Ticketmaster sold 15,000 tickets per minute in North America, with more than 20 million fee-bearing tickets sold each month globally.
In the first quarter, more than 99.9% of transactions on Ticketmaster were processed without any technical issues. Ticketmaster expects to benefit in the remaining 2023 from increased Live Nation concert ticket sales and additional sales from new clients.
LYV’s sponsorship continues to witness robust growth. In the first quarter of 2023, the company added partners for 2023 and beyond, including Google Pixel, PayPal and Levi's, and is witnessing solid contributions from them. In the same quarter, total revenues from Sponsorship & Advertising business came in at $170.1 million, up 47% from $115.7 million reported in the previous year.
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Shares of Live Nation have soared 17% in the past six months compared with the Zacks Leisure and Recreation Services industry’s growth of 8.4%.
Live Nation witnesses cost increases due to increased labor-hiring costs, artist activation costs and other operational expenses. In first-quarter 2023, total direct operating expenses were $2,115.6 million compared with $1,071 million reported in the prior-year quarter. Selling, general and administrative expenses in the same quarter were $690.3 million compared with $570.2 million reported in the prior-year period.
The company is cautious of cost overruns related to the development and expansion of live music venues. An increase in costs is likely to affect the company’s bottom line.
Zacks Rank & Key Picks
Live Nation currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Consumer Discretionary sector.
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The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates a rise of 48.3% and 160.5%, respectively, from the year-ago period’s levels.
MGM Resorts International MGM currently sports a Zacks Rank #1. MGM delivered a trailing four-quarter earnings surprise of 81%, on average. Shares of the company have increased 12.6% in the past six months.
The Zacks Consensus Estimate for MGM’s 2023 sales indicates a rise of 15.4%, while the same for EPS indicates a decline of 45.9% from the year-ago period’s levels.
Crocs, Inc. CROX currently carries a Zacks Rank #2 (Buy). CROX has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of the company have increased 9.2% in the past six months.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.2% and 5.7%, respectively, from the year-ago period’s levels.
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