Eventbrite stock faces pressure as Truist cites weak earnings outlook
On Friday, Truist Securities adjusted its stance on Eventbrite Inc. (NYSE:), moving the stock’s rating from Buy to Hold.
The downgrade comes in response to the company’s second-quarter 2024 earnings, which did not meet the already low expectations, and its third-quarter and full-year 2024 guidance that falls significantly short of consensus.
The company’s recent decision to implement organizer fees is cited as a contributing factor to the stronger headwinds facing paid ticket growth. Truist Securities now anticipates a turnaround in ticket growth in the second half of 2025, suggesting that revenue pressures may persist in the near term, potentially keeping the stock’s price constrained.
In addition to the rating change, management’s announcement of an 11% reduction in force (RIF) is highlighted as a strategic move to safeguard profitability and margins in the near term while the company repositions for future growth.
With Eventbrite’s share price currently under $5, Truist Securities has also chosen to withdraw its price target, which was previously set at $11. The firm’s analysis points to a challenging period ahead for Eventbrite as it navigates through the current market conditions and works towards a recovery in ticket sales growth.
InvestingPro Insights
As Eventbrite Inc. (NYSE:EB) faces a challenging period, it’s crucial for investors to consider key metrics and expert insights. Based on real-time data from InvestingPro, Eventbrite holds a market cap of $369.04M and has demonstrated an 18.2% revenue growth over the last twelve months as of Q1 2024. Despite this growth, the company’s P/E ratio is negative at -21.15, reflecting the market’s concerns over its profitability.
From an operational standpoint, Eventbrite’s gross profit margin stands strong at 70.18%, yet the company has not been profitable over the last twelve months, with an operating income margin of -5.52%. In terms of stock performance, the price has seen a significant downturn, with a 1-month total return of -15.56% and a 6-month total return of -56.52%, indicating a bearish trend in investor sentiment.
InvestingPro Tips suggest that Eventbrite is currently trading at a low revenue valuation multiple and is in a position where liquid assets exceed short-term obligations, providing some financial flexibility. Additionally, with the stock trading near its 52-week low, some investors might consider this an entry point, especially as management has been aggressively buying back shares, which could signal confidence in the company’s future. For those interested in a more comprehensive analysis, InvestingPro offers additional tips on Eventbrite, available at https://www.investing.com/pro/EB.
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