With Congress in the midst of debating the economic bailout package, and with talk of a recession still lingering in the air, publicly traded ticket and entertainment companies are watching as the values of their stocks continue to slide. In addition, nervousness is beginning to ramp up among brokers as they fret that ticket buyers may start reconsidering going to that concert or sporting event.
Of five stocks that TicketNews tracked today, October 2 – Ticketmaster (TKTM); Live Nation (LYV); eBay, owner of StubHub (EBAY); Tix Corp. (TIXC); and Premier Exhibitions Inc. (PRXI) – all are trading below or near their 52-week lows and at about half of their former value. Ticketmaster stock only began trading in late August, but the stock has gone from a high of $27 per share soon after its debut to under $13 per share, but on the bright side investment firm Stifel Nicolaus earlier this week upgraded the stock from a “hold” to a “buy” because it potentially represents good value. See stock tickers for each company below.
Live Nation’s shares have hovered between $16 and $17 recently, despite favorable press coverage of its recent moves to bolster its fledgling ticketing operation. EBay stock was trading under $20 today as well, considerably under the $40-plus it was trading at within the past year. And, Tix Corp. and Premier Exhibitions were both trading separately in the $2 range.
Several factors are contributing to the stock swoon, most notably the overall malaise on Wall Street which has also battered other tech and consumer stocks, but what has brokers concerned is the guessing game of when ticket buyers will begin scaling back.
“Clearly [the weak economy] is going to have an impact on [the ticket] business because consumers are nervous and are being much more careful spending their money,” said one East Coast broker. “To brace for these cutbacks, we are looking to refrain from purchasing more speculative inventory, instead trying to focus on our core business that we feel will have value even in these troublesome times.”
Sports tickets are considered generally recession proof because diehard fans always seem to pay when their teams are good, but in the New York area with three new stadiums under construction, and investment banks closing, there are concerns that personal seat licenses and ticket prices are growing out of control.
“The broader indices are all off 3 percent to off 4.3 percent, so the Street is worried about all stocks, not just economically-sensitive stocks, although any stocks with significant debt leverage are feeling more pressure today,” Jim Boyle, senior analyst and senior VP for CL King & Associates, told TicketNews earlier in the week.
Jason Berger of Allshows.com remains cautious but is a bit more optimistic. “Allshows.com believes the average consumer is still in the market for live entertainment. Certain higher priced events are taking longer to sell and some markets are affected more than others. We find consumer purchases are being delayed until closer to the event. There has been a noticeable downturn in consumer spending, but we still see significant activity in the industry. We are scaling our ticket purchases to meet expected demand in quality and price, however it is difficult to accurately predict market trends months in advance.”
He added, “While business in the financial sector has been significantly affected, other sectors are active. Allshows.com is not exclusively a wholesaler to the major portals. Our staff of experienced ticket professionals continues to provide full service to customers and offer market advice. We are optimistic an overall business improvement will take place within the 12 to 16 months.”