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Why Eventbrite Stock Is Significantly Overvalued

Eventbrite (EB) is an electronic ticketing, event planning and promoting platform. It operates in the United States and internationally.

Eventbrite has been hurt immensely by the pandemic as countless events across the globe have been canceled. Still, the stock is not trading at a significant discount considering the disruption to operations.

I am bearish on Eventbrite stock.

COVID-19 Calamity

COVID-19 hit the entertainment industry like a bomb in 2020. Thousands of events were canceled or postponed. Then the Delta variant further disrupted the industry. Now, Omicron is raging in the U.S. The question shareholders of Eventbrite might ask is, what’s next?

Before COVID-19, Eventbrite was an exciting up-and-coming company. Revenues were rising each year, and the future was bright. In 2017, the company posted $202 million in top-line revenue.

This jumped over 44% to $292 million in 2018. Eventbrite followed this up with a record 2019, in which revenues peaked at $327 million. Then COVID-19 struck, and results came crashing down.

The company made just $106 million in all of 2020. The operating loss was unsurprisingly dismal at $168 million.

Results are improving, albeit slowly. For Q3 2021, Eventbrite posted over $53 million in revenue. This is still down significantly from 2019, when Q3 saw over $82 million in sales.

The company has been issuing debt to survive this crisis. At the end of 2019, Eventbrite was long-term debt-free. By the end of 2020, this number had risen to $206.6 million. By Q3 2021, it was up to $353.1 million. This is a lot of debt to service for a company yet to post an operating profit in a recent fiscal year.

On February 1, 2020, Eventbrite traded for $21.15 per share. The current price, $16.64, is only down about 21%. The enterprise value at that time was $1.39 billion.

The present enterprise value stands at $1.58 billion due to the increased share count and debt. Shareholders are definitely not receiving an attractive discount on this stock.

Signs of Life

There are some positive signs for Eventbrite. Net revenue has increased every quarter since Q2 2020. Paid tickets are also up, coming in at 19 million in Q3 2021 versus just 9 million in Q3 2020.

Ticket sales are still down substantially from 2019 levels. The company also reports a positive adjusted EBITDA for Q3 2021 at $6 million. Cash on hand was over $667 million, which is more than enough to cover current liabilities.

It is still possible that the company could have a bright future once COVID-19’s disruption in the entertainment industry is over. Unfortunately, no one knows when that will be. In the meantime, these positive signs are not enough to justify the current stock price.

Wall Street

Turning to Wall Street, analysts are very cautious on Eventbrite stock. The company is thinly followed and warrants just two Hold ratings. Interestingly, the average Eventbrite price target of $19.50 implies 19.9% upside potential.

More Downside Ahead

Eventbrite has been hit as hard as anyone by the pandemic. The company was in the worst possible position considering its business model. Management has weathered the storm to keep the company afloat, and there are signs that it could one day recover.

Unfortunately, the stock is not trading like the company is distressed, which it certainly is. Revenues and ticket sales remain significantly off the pace of 2019, and long-term debt has ballooned.

Because of this, the stock appears overvalued considerably and does not represent a solid investment at this time.

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