Global entertainment company, Live Nation Entertainment, Inc. (NYSE:LYV), is being probed for possible misconduct related to the ticket sale of Taylor Swift’s live concert “Eras Tour,” which will be held in 2023. Live Nation’s ticket service unit, Ticketmaster, is at the center of the Justice Department’s (DOJ) investigation.
Live Nation offers various services in the entertainment realm, including promoting live concerts at owned or rented venues, sponsorship and advertising with artists, and selling tickets on behalf of clients for a fee.
As per Ticketmaster, the presale of Swift’s concert tickets last week, which were meant only for “invitees,” broke all historic records. The company sold over 2 million tickets in a single day, which also led to a jump in ticket prices. The huge fan rush led to a crash on Ticketmaster’s system, leaving consumers waiting for hours in an online queue for a ticket, only to be timed out eventually. Soon after, Ticketmaster canceled the sale of tour tickets to the general public, which was to be held on Friday, November 19.
Lawmakers are investigating if Ticketmaster willfully caused the system to crash in order to spike the ticket rates higher and earn extra bucks.
Live Nation and Ticketmaster merged in 2010, and now a few attorneys are suggesting that demerging the company would end its monopolistic power. A trio of senators that are proposing the split told the DOJ in a letter, “This may be the only way to truly protect consumers, artists, and venue operators and to restore competition in the ticketing market.”
Is LYV a Buy?
On TipRanks, LYV stock has a Moderate Buy consensus rating. This is based on four Buys and two Hold ratings in the past three months. Also, the average Live Nation Entertainment stock prediction of $107.60 implies an impressive 57.2% upside potential to current levels. Meanwhile, the stock has lost 43.5% so far this year.
At the same time, LYV stock trades at a forward price/sale (P/S fwd) multiple of 0.97x, much lower than both the sector median of 1.27x and its five-year average multiple of 2.40x. This implies that Live Nation Entertainment is undervalued currently and could be looked at as an investment option, especially considering its wide moat.
