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Why Eventbrite Is Getting Mauled Today

By Brian Feroldi - Updated Apr 12, 2019 at 9:21AM

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Shares tumbled after the company reported fourth-quarter results. Do the numbers justify the huge market reaction?

What happened

Investors in Eventbrite (EB 4.07%) are having a tough end to the trading week. Shares of the live entertainment company are down 28% after it reported mixed fourth-quarter results and issued disappointing guidance.

So what

The headline numbers from the company's fourth quarter were both good and bad:

  • Revenue grew 21% to $75.9 million. That was nicely ahead of the $73.2 million that analysts were looking for.
  • Net loss was $13 million, or $0.17 per share. That was worse than the $0.13 loss that Wall Street expected.

Investors are probably not all that excited about the higher-than-expected net loss. However, the huge market reaction appears to be related to the company's guidance for the upcoming quarter.

Management stated that it expects sales in the first quarter of 2019 to range between $80 million and $84 million. That's a far cry from the $91.3 million that analysts were expecting.

Three people looking at a computer screen and acting concerned.

Image source: Getty Images.

Management explained in its quarterly letter to shareholders that a substantial amount of its resources are currently being devoted to the integration of Ticketfly. Ticketfly is an event ticketing company that was purchased from Pandora in 2017 for $200 million.

Management stated that it has made "substantial progress" on this front but admitted that it has proven to be a more complex and time-consuming process than was originally thought.

The company expects the migration to be completed in the back half of 2019. Once everything is done, management plans on shifting all of its available resources to "focus on growth."

Given the mixed quarterly results and disappointing guidance, it is understandable why shares are being mauled today.

Check out the latest earnings call transcripts for the companies we cover.

Now what

Eventbrite has now whiffed on the bottom line during its first two quarterly earnings reports as a public company. That's not exactly something that investors like to see.

I had high hopes for this business when it first hit the public markets and still believe that it holds long-term potential. However, I must admit that my enthusiasm is starting to wane given that it has disappointed investors in its first two earnings reports. For that reason, I won't be in any rush to buy this stock even though it is substantially cheaper today.

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