About Eventbrite
With cases and fears of COVID-19 coming down, it feels like there is something in the air with respect to people wanting nothing more than to get their core friend group together, pay an absurdly high amount of money and go see their favorite artist(s) perform in a group filled with sweaty, screaming strangers.
Sounds fun, right?
Given all of the previous restrictions throughout the United States and the rest of the globe, who could blame anyone for wanting to get back out into the real world and interact with others on a more deep, meaningful level?
When the world isn’t filled with lockdowns and other restrictions, this is just when a company such as Eventbrite thrives.
Eventbrite can be thought of as a wildly more democratized version of StubHub and Ticketmaster, where the two aforementioned companies are essentially ticket brokerage platforms where you can purchase tickets to see your favorite artist, your favorite sports team or any other notable figure or group of figures perform.
Eventbrite is a bit different in the sense that instead of being a platform for just the mainstream entertainers of the world, it’s a bit more down to earth in that it is a platform for pretty much everyone.
No, really.
More specifically, if you were to go to eventbrite.com and scroll around for a few minutes, you could find a vast pool of events happening in and around your area, from local author book signings and meet-and-greets to an improv comedy workshop and quite literally so much more, some of these events, by the way, are free to attend and are also held remotely.
One can also put together and advertise for their own event through Eventbrite in a matter of minutes.
It’s a real people’s platform.
Onto the business side of things, it would be a good idea for one to consider the fact that this company might not be as recession resistant since most of the events on the company’s platform can be viewed as being consumer discretionary to the max, and if the economy finds itself in a pinch and consumers have to cut back on some their expenses, attending fun classes or semi-educational seminars through Eventbrite is probably going to be one of the first expenses they are to cut back on.
However, it is also worth noting that the younger, rising (in age) generations such as millennials are really, really into experiences and thus might not be as tied to their dollars so long as they can have a memorable (hopefully in a positive sense) experience with their friends.
At any rate, it should also be noted that San Francisco, California-based Eventbrite generates revenue through the fees it assesses event partakers as well as event organizers, which, to us, makes general sense given that if not for Eventbrite and its platform, it would be immensely difficult for both event hosts and guests to connect and make an event happen in the first place.
That’s Eventbrite in a nutshell and it is just about that time to delve into some of the company’s core financials and other relevant metrics in efforts of figuring out whether or not this event platform is worth considering as an investment for now and, you guessed it, for later.
Eventbrite’s stock financials
In getting things kicked off with the ever so clever Eventbrite, it is currently a $971 million company (according to its market capitalization) with a share price of $9.70 along with no annually distributed dividend as well as no listed price-to-earnings (P/E) ratio.
This company not having a price-to-earnings ratio and simultaneously not paying out a consistent annual dividend is far from shocking as this company is likely (and really, hopefully is) reinvesting every single bit of what it earns right back into the business, as scaled, fee-based consumer discretionary service platforms aren’t exactly well known for their innate ability to turn a profit, at least, a net profit.
Therefore, we take zero offense and think it is most prudent for this company to continue aggressively reinvesting, as it likely isn’t net profitable (on a trailing twelve month, TTM basis) at this juncture given the intense amount of investment necessary to even get a platform such as this one off the ground to begin with.
Of course, we could be wrong, but we doubt we are.
As it pertains to the overall state of the company’s balance sheet, Eventbrite’s executives are in charge of $895 million in terms of total assets along with $729 million in terms of total liabilities.
Is this good or bad?
It depends.
Namely, to us, it hinges on how much cash this company has been bleeding in recent history, which, if it is an exponentially growing amount, could envelope this company and put it out of business, however, if the company is losing some cash but the amount is relatively tamed (or comparably well covered by its total assets), this, in essence, is a technology firm and a little (responsible) debt financing is almost always necessary to grow both domestically and its global presence.
We will learn more about this shortly.
When it comes to the company’s income statement, Eventbrite’s total annual revenues have honestly been far from encouraging.
While we fully expected this company’s total revenues to be increasing at a rapid rate year-over-year (YOY) with an expected notable drop during 2020 (it’s fair to give this company some breathing room during that era, obviously), revenue growth hasn’t really been as strong as we had initially anticipated and even following the initial public onset of COVID-19, the company’s revenues didn’t rebound as well as we had hoped.
As a sort of reference, Eventbrite’s annual revenue in 2018 stood at $291.6 million, rising the following year to around $326.8 million, taking a COVID-19-induced plunge to $106 million, regaining some revenue traction in 2021 to about $187 million, which is much less than we had initially hoped for and expected, indicating that many either perhaps forgot about Eventbrite or maybe found less expensive ways to get groups together for events.
Regardless, this trend isn’t exactly a favorable one from our eyes and while the company’s total annual revenues are still on track to increase, we have our fair share of nerves with respect to the company retaining users both on the consumer end and the host end.
We just feel like its revenues should be growing at a faster rate.
Onto the state of the company’s cash flow statement, Eventbrite sure is burning through some cash, which, again, was to be expected and it was also fair to expect that 2020 was an absolute bloodbath for the company in terms of retaining net income and generating total cash from operations, which it most definitely was.
More specifically, the company’s net income in 2020 was reported as being approximately -$224 million, not to mention during that same year it reported its total cash from operations as being -$186 million, which, relative to its balance sheet, was and still is a big, big deal.
With recent rumblings regarding new COVID variants coming back around, we hope that this company is doing anything and everything it can to pivot and focus on the online, remote event space, as we view this as a viable, growing segment of its business and the industry in which it operates.
Any way this company can cushion its cash flow moving forward, COVID-19 or not, is an absolute, unequivocal must.
It is worth briefly noting, however, that while Eventbrite’s net income each year between 2018 and 2022 was negative, its total cash from operations was only negative during 2020, which provides some vague but still much needed light at the end of the cash flow tunnel, as it indicates that Eventbrite does have the ability to produce some cash, which is no small task for a business such as this one.
Eventbrite’s stock fundamentals
Full disclosure, we are not, repeat, are not expecting much from the figures that are to come, especially given the previously discussed state of the company’s net income and cash flows.
However, tech is tech and as a matter of pure fact, Eventbrite operates in a relatively low-margin line of business and while it may turn a (net) profitable corner at some point, even some of the greatest, ubiquitous fee-based consumer discretionary platforms have yet to become net profitable on a trailing twelve month (TTM) basis.
DoorDash and Spotify are two prime examples.
And Eventbrite isn’t even close to having the sort of scale and/or reach as these companies already do which could both be seen as a gift and a curse, primarily depending upon who you’re asking.
At any rate, according to the figures displayed on TD Ameritrade’s platform, Eventbrite’s TTM net profit margin is -11.06% to the industry’s listed respective average of 15.63%, which, again, is far from unexpected given the state of its recent net income figures, however, if the company makes the aforementioned pivot into the digital experience realm and can spearhead that category, we think it would be ultra conducive to beefing up its TTM net profit margin, paving a way for this company to become more competitive on this front.
With respect to its TTM returns on assets and investment(s), Eventbrite’s (also according to the figures displayed on TD Ameritrade’s platform) are also well below that of the industry’s respective averages which makes sense given the aforementioned points as well as the fact that it will probably take some time for the company to attain returns in these regards as its past and current investments and initiatives unfold in the years and perhaps decades to come.
Should you buy Eventbrite stock?
I really like what this company does; it connects people who might’ve not otherwise met or interacted.
This being the case, however, business is business and this company has some work to do before our team gets amped up about potentially investing in its shares (NYSE: EB), specifically in relation to its TTM net profit margin and its core returns on assets and investment(s), not to mention the improvement we also need to see in demand (through revenues) as well.
It is our viewpoint that if this company can’t even further its appeal to the younger audiences and subsequently can’t grow its revenues at a faster rate, it would be difficult to justify getting behind this company at all, at least for now.
All of this being the case, it would make the most sense if we gave this company’s stock a “sell” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.