Eventbrite (NYSE:EB), a widely known platform offering event management and ticketing services, has faced significant challenges since the COVID-19 pandemic. Due to increased creator fees, the company has seen a decrease in creator counts and paid ticket volumes. The stock has plunged 73% over the past three years. Yet, with a revival in the desire for live experiences, Eventbrite might just bounce back.
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The stock trades at a significant discount to industry peers, and recent quarterly revenue exceeded expectations, pointing to a potential positive earnings trajectory, making it a contrarian choice for value investors with a long-term vision.
Eventbrite Looks To Shed COVID Hangover
Eventbrite is a global events marketplace serving event creators and attendees in nearly 180 countries. The company provides a self-service platform for organizing and ticketing live experiences.
Despite facing a major downturn amid COVID-19, when public events were put on hold, Eventbrite has attempted to bounce back with the economy reopening and a resurgent demand for live experiences. The platform managed over 300 million tickets for over 5 million events in the previous year alone.
However, the event ticketing space remains fiercely competitive. Consequently, to increase profitability, the company increased pricing through new creator fees, resulting in higher net revenue per ticket but fueling declining creator counts and paid ticket volumes. If the company can strike a healthy balance between the two, it could find its financial footing, potentially catalyzing shares higher.
Eventbrite’s Recent Financial Results
Eventbrite has announced its financial results for the first quarter of 2024. The company reported revenue of $86.25 million, beating analysts’ projections for $85.20 million while marking an 11% year-over-year improvement. Eventbrite Ads and organizer fees accounted for over 13% of the total net revenue, as the company sold 65.8 million tickets across 1.4 million events.
The gross margin increased to 71.0%, a significant rise from the previous year’s 66.1%. The net loss was $4.5 million, an improvement from the $12.7 million net loss faced in the same period last year. Adjusted EBITDA of $10.4 million, including $0.1 million of restructuring charges, led to an Adjusted EBITDA margin of 12.1%. However, earnings per share (EPS) of -$0.05 missed analysts’ estimates of -$0.04.
Management has issued guidance, forecasting Q2 2024 revenues between $84 million and $87 million and annual revenue between $360 million and $371 million. The adjusted EBITDA margin for 2024 is anticipated to fall within the low to mid-teen range.
What Is the Price Target for EB Stock?
Analysts following the company have been cautiously optimistic about the stock. For instance, Morgan Stanley analyst Cameron Mansson-Perrone recently lowered the price target on the shares from $9 to $6.50 while maintaining an Equal Weight rating. He noted that the initial reaction to new creator fees had a more adverse impact on growth than expected but acknowledged the new revenue model could enhance growth over the long term if successful.
Eventbrite is rated a Moderate Buy overall based on six analysts’ recommendations and recently issued price targets. The average price target for EB stock is $8.38, representing a potential upside of 86.22% from current levels.
The stock has continued its extended downward slide, losing 46% year-to-date. It trades at the bottom of its 52-week price range of $4.53 – $11.91 and shows ongoing negative price momentum, trading below its 20-day (4.80) and 50-day (5.08) moving averages. The prolonged slide in price has pushed the stock into deep value territory, with a P/S ratio of 1.3x, compared to the Software Application industry average of 6.85x.
Bottom Line on EB
Eventbrite has had its share of challenges. However, the company is showing signs of revival, with recent quarterly revenues surpassing expectations, demonstrating that increased creator fees have resulted in a higher net revenue per ticket, suggesting a possible positive earnings trajectory on the horizon. The stock trades at a significant discount to industry peers, making it an intriguing contrarian choice for value investors.
