Live Nation Entertainment (LYV) is a live entertainment company. It is involved in Concerts, Ticketing, and Sponsorship & Advertising segments.
LYV stock took a major hit to the chin this past week as a result of the Astroworld Festival crowd crush incident. The Astroworld Festival and Live Nation have been hit with multiple lawsuits. As a result, shares of LYV are now down about 8% from their $123 and change peak hit, following a spectacular round of earnings results.
Indeed, the Astroworld tragedy will be remembered by concertgoers for many years to come. Many will think twice about booking a ticket to the next big Live Nation-hosted event. The real question on the minds of investors is just how badly the tragedy will affect sales moving forward.
Regardless, LYV stock is still quite expensive after nearly doubling over the past year. The Atroworld crisis just adds a layer of unknowns to a reopening play that may have surged too high, too fast. As such, I am bearish on the stock. (See Insiders’ Hot Stocks on TipRanks)
Astroworld Catastrophe Weighs on LYV Stock
Undoubtedly, many people may have never known what a “crowd crush” was before learning of the incident. Now, everybody is aware of the dangers (aside from contracting COVID-19) of being within a crowd at a mass gathering such as a concert.
As stated earlier, a lot of people are likely thinking twice about attending their next big Live Nation concert, and the 7% pullback in shares of LYV may be more than warranted.
As Live Nation prepares to defend itself, one has to think that it will have to beef up safety protocols to ensure such a tragic occurrence will never have the chance to happen again.
The company has to regain the trust of prospective customers if it’s to move on from this horrific incident. It won’t be easy, but the company has to take drastic steps to ensure the safety of its customers and get the message through.
For now, the stock will continue feeling the heat, and sales growth momentum could be dealt a major hit over the medium term. Could Live Nation stock shed the gains posted after its latest quarter? It most certainly could, as the company deals with the aftermath.
Is Live Nation Entertainment Still a Great Reopening Stock?
There’s still tremendous pent-up demand for live events after numerous events were canceled through 2020 and the early part of 2021.
Only time will tell how Astroworld will impact the company’s sales growth momentum. Given Live Nation is likely to take immediate action to prevent another such disaster, I think the company is poised to continue higher, as it meets pent-up demand for live events.
Although recent momentum suggests the worst of the pandemic is over, one must also not discount the potential for a truly insidious variant of COVID-19 to appear in the new year.
Given vaccines and growing treatment options, a lockdown-inducing variant seems unlikely at this juncture. Still, investors must be prepared for anything when it comes to any company that’s so dependent on having the economy remain open.
Wall Street’s Take
Turning to Wall Street, LYV stock holds a Moderate Buy consensus rating. Out of eight analysts, there are five Buys and three Hold ratings.
The average Live Nation Entertainment price target of $114.14 implies 1.1% upside potential.
Analyst price targets range from a low of $95.00 per share to a high of $126.00 per share.
The Bottom Line on Live Nation Entertainment
As negative headlines continue flowing in, I still believe Live Nation is a great reopening play over the long run. The valuation, however, still seems rich at around 6.5 times sales, even after the 8% pullback.
Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.
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