Is Live Nation Entertainment (LYV) Stock A Buy For Your Long-Term Portfolio?
From the pandemic, there are entertainment stocks that have made giant leaps and there are some that ran out of business. And among the latter, there were some that readjusted their strategies and came out stronger. Live Nation Entertainment (NYSE: LYV) is one prime example. The concert promoter has been forced to suspend or delay the majority of its schedule for as long as social distancing is still taking place.
Before the pandemic, Live Nation was a top dog in live entertainment. For those unfamiliar, the company also owns Ticketmaster, the country’s largest ticketing service. Live Nation manages many popular artists. It is able to request venues hosting its events to use Ticketmaster. In 2019, the company recorded a revenue of $11.5 billion in revenue. Of course, the number was much lower in 2020 no thanks to the pandemic. Therefore, you could imagine how big of an impact it was on the company’s stock price when social distancing measures forced all activities to shut.
You see, it’s been almost a year since major concerts have been canceled or postponed. That said, you would expect the shares would be like those of airline and travel-related companies. However, LYV stock has made an impressive, steady comeback since the stock market sell-off in March. So, what happened?
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Quick Transition Online Helped Send LYV Stock Higher
After plummeting more than 50% in LYV stock price last March, it’s really remarkable to see that the company has recouped most of its losses. There’s no question that the novel coronavirus has brought the company down to its knees. But it’s not all bad news. Its strong balance sheet gave the company ample liquidity to survive the crisis. And that buffer has allowed the company to try out new things such as offering drive-in shows, live streams, and new content through its “Live From Home” virtual music hub. Its acquisition of a majority stake in the live stream platform Veeps is one of the reasons why it is trading higher this week.
“Live-streaming is a great complement to our core business, and essentially gives any show an unlimited capacity,” said Live Nation’s president and CEO Michael Rapino.
Considering the impact of the coronavirus pandemic, the company’s comeback story has been truly sensational nonetheless. It has caught a fair share of attention from analysts. Some are saying it is a pure-play on reopening. Therefore, if you’re looking for top epicenter stocks to buy, you know what to add to your watchlist.
“Live Nation has adopted new ways of connecting both fans and artists including live-streaming and e-commerce that we think will improve monetization opportunities as the company emerges from the pandemic…We think this will help Live Nation drive a few incremental dollars in revenue per fan – streaming concerts to fans that perhaps can’t attend an event live and/or enhance the live experience for those attending,”- Stephen Glagola, Cowen Analyst
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COVID-19 Vaccines; A Potential Catalyst For Live Nation Stock?
As the world continues its efforts in rolling out COVID-19 vaccines, is Live Nation stock ready to roll? Maybe you are looking for an answer to this question too. Well, the truth is, no way one could know exactly when the pandemic will come to an end. But at least there’s a light at the end of the tunnel with safe and effective vaccines. Live Nation expects to be able to reduce costs by $900 million in 2020. The company also said that 83% of its fans are keeping tickets for rescheduled shows instead of seeking refunds. It sounds like the company has got a loyal fan base indeed. A survey showed that 95% of fans intend to resume going to live events after the lifting of restrictions. This is a promising sign that the business should rebound rather quickly once the pandemic is over.
On top of that, Live Nation expects to benefit from the pent-up demand for concerts and events once the pandemic is under control. In the meantime, the company has to rely on online streaming as COVID-19 cases show no signs of stopping across the globe. Should the company convert 95% of the fans to actual ticket sales when the pandemic is over, we could see LYV stock continue to recover throughout 2021 and beyond.
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Bottom Line On LYV Stock
Despite the run-up in its stock price, many analysts are still expecting the company to report significant losses for 2021. Many believe that the company will emerge stronger from this crisis. Nevertheless, the road to recovery may still be a long one. If you are betting on the recovery of the company based on how fast the world can return to normalcy, you should prepare for a number of disappointments. After all, we don’t know how many additional waves of the pandemic we may still see. However, perhaps you are betting that the live streams will continue to bring in new avenues for fans to show their support. If so, there’s a good chance the company will do reasonably well. But here’s one thing that can soothe the minds of existing investors. That is, the company is in a much leaner cost situation and a much better financial position.
Now that we have a couple of COVID-19 vaccines that are safe and effective, a robust outdoor summer season in 2021 seems possible. Would that be too much to ask for? Or would the return to a pre-pandemic world be a winding and laborious journey? Your guess is as good as mine.