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Live Nation Entertainment: still undervalued as live music returns to US


Live Nation Entertainment [NYSE:LYV]: the concerts are back – especially in the USA, which is the most profitable market.

In 2009, Live Nation and Ticketmaster, a concert promotion firm and ticketing company, reached an agreement to merge. Surprisingly, the new company received regulatory approval and was named Live Nation Entertainment. Michael Rapino, then-CEO of Live Nation, became the new company’s CEO, while Ticketmaster CEO Irving Azoff was named executive chairman. Some artists (Bruce Springsteen etc..) were publicly against the merger, but the merger was approved and it created a powerhouse in the live entertainment business. It was a brilliant move, since at the same time musicians had to tour more to make a living, since record sales were plummeting due to streaming music services.

LYV stock trading history so far

Live Nation was trading before Covid-19 in the range of $42.57 to $74.19 between December, 2017 to February, 2020. The Covid-19 bottom was reached on Mach 22nd, 2020 at $21,70. The market cap of Live Nation shares is roughly $18 billion. The trading range in the last 52 weeks saw a high of high of $94.63 achieved on 3rd of March 2021 – the 52-week low of $44.92 on 14th of July 2020. The stock closed at $83.66 (-11,59% from All Time High) in the time of writing this article on July 9th, 2021.

I myself would start a position with LYV at these levels, because we will not go back to lockdowns since the USA has achieved enough of a vaccination percentage among adult populations aged 18 to 70. The next reporting date of the company is August 3rd, 2021.

CEO Mike Rapino just confirmed in a recent interview that 70% of Live Nation’s business is in the USA and the UK. These countries are now [nearly] fully open to a 100% capacity for the vaccinated. The Foo Fighters show 100% “Sold Out” in Madison Square Garden on June 20th, 2021 and kicked things off in the USA with style. The rest of Europe will follow in the fall and Asia will be on line in 2023. The appetite for live shows is huge and it will generate excellent profits for years to come. I would predict very sizeable gains going forward. The analyst community has not really found the stock yet and target prices are at the $96-97 level.

Live Nation: the main shareholders

In 2020, Live Nation was hit particularly hard by the novel coronavirus pandemic, with essentially all concerts and sporting events around the world on hold. On February 25, 2021, Live Nation released its full-year 2020 financial results, of which the company saw revenues fall by 84%. This is the past and we are looking towardsthe future.

Financial help from the Saudi Arabia’s sovereign wealth fund

The government of Saudi Arabia’s sovereign wealth fund has acquired a 5.7% stake in Live Nation, the parent company of Ticketmaster. The investment is passive, and was purchased on the open market. The Saudi Public Investment Fund is now the company’s third-largest shareholder, with John Malone’s Liberty Media the largest individual shareholder with a 33% stake.

Enter 2021 and live music is back in America

The concerts are back in the USA, which is the most lucrative market in the live entertainment business; most music tours have made most of their money in the United States because there are more large venues in proximity to each other and yes to Las Vegas. You can have multiple shows running for weeks or even months. For example: Legendary Rockstar Rod Stewart will celebrate the 10th anniversary of his acclaimed residency “Rod Stewart: The Hits.” at The Colosseum at Caesars Palace when he returns to Las Vegas for nine shows this fall. Presented in partnership by Caesars Entertainment (CZR) Live Nation (LYV) Las Vegas, “Rod Stewart: The Hits.” will perform select dates October 6 through 23, 2021.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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