Live Nation stock price has surged to a record high this year, even as the company goes through legal issues in the United States. LYV shares have also surged even as concerns about its valuation continues. So, is the stock a good investment ahead of its earnings report on Thursday?
Live Nation’s business is thriving
Live Nation is a giant American company that operates as a near monopoly in the entertainment industry. It is the biggest player in the live entertainment industry globally with over 765 million customers annually.
Live Nation owns over 370 venues globally. It also owns Ticketmaster, a company that it acquired in 2010. Ticketmaster is the biggest event booking website globally with over 10,000 clients globally.
Live Nation also has a long history with the biggest artists in the US and markets, making it the most logical choice for those doing tourings. It makes money in various ways, including ticket sales and advertisements.
LYV’s business has done well in the past few years as it emerged from the Covid-19 shutdowns that dragged its revenues to $1.8 billion. Its annual revenue has surged to over $22 billion, higher than the $19 billion it made before the pandemic.
LYV earnings ahead
The next important catalyst for the Live Nation stock price will be its quarterly earnings scheduled on Thursday. These results will provide more color about its business during the quarter and in 2024.
The average revenue estimate is that the company made over $5.67 billion in Q4, a few points below the $5.85 billion it made a year earlier. That decline will bring its annual revenue figure to $23.16 billion.
Analysts expect that Live Nation’s revenue will then surge by 15% this year to $26.67 billion.
The most recent results showed that Live Nation’s revenue came in at $7.7 billion, while its operating income rose to $640 million. It sold 144 million for its concerts and received bookings for its all sponsorships.
All its business lines are doing well. Ticketmaster made $694 million in the third quarter as demand continues. This is a notable business because of its dominant market share that has become highly controversial. Politicians have called for the separation of the company from Live Nation, blaming it for higher ticket prices.
Live Nation Concerts had over $6.6 billion in revenue, while its sponsorship business made over $390 million in revenues.
Good balance sheet, valuation concerns remain
The company also has a good balance sheet with over $5.5 billion in cash and equivalents. Some of this balance sheet is in the form of ticketing client cash, which the management uses to fund its operations.
A key concern for Live Nation stock is that it is a highly overvalued company, trading at a forward P/E ratio of 128, higher than the sector median of 14. That’s because the firm has a market cap of over $35 billion against annual profits of less than $500 million.
The average Live Nation stock price forecast among analysts is $148, smaller than the current $153.
Live Nation stock price analysis
The weekly chart shows that the LYV share price has been in a strong bull run in the past few months as we predicted. It recently flipped the crucial resistance level at $127.6 into a support. This was a crucial point as it was the previous all-time high.
The stock has formed a break and retest pattern, a continuation sign. It has moved above the 50-week and 100-week Exponential Moving Averages (EMA).
The Live Nation share price’s Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have all continued rising. Therefore, the stock will likely continue rising as bulls target the key resistance point at $160.
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