It's not as easy to profit off of midsize events and concerts as you might guess -- online ticketing company Eventbrite (NYSE:EB) reported greater-than-expected losses for the fourth quarter, despite beating on revenue, and worse still, offered tepid guidance for the current period. As a result, it lost a quarter of its market cap last Friday.
In this segment from Motley Fool Money, host Chris Hill and senior analyst Jason Moser talk about Eventbrite's business model, its TicketFly acquisition, long-term plans, international efforts, and whether the shares are attractive after the pullback.
A full transcript follows the video.
This video was recorded on March 8, 2019.
Chris Hill: Rough week for Eventbrite shareholders. The event ticket platform posted a loss for the fourth quarter, and revenue guidance for the first quarter was not what Wall Street wanted. Shares of Eventbrite down 25% on Friday. Jason, was it that bad? Because it seems pretty bad!
Jason Moser: [laughs] Well, the question, I think, is, knowing what we know today, is this a bad business? Or, is this a business that is being repriced for good reasons? I think it's the latter. I think this is a good business, but you have to remember, this is a young company, just fresh to the public markets. Low float, stock price based on zero fundamentals because they're not making any money yet. So, to me, this was more a matter of when, not if. Frankly, I'm interested in the stock now with this pullback. When you look at the numbers, it was a good fourth quarter. Net revenue and paid tickets are up. Quarter one guidance was a little bit light. Now, there are good reasons for that. Before Eventbrite went public, they acquired Ticketfly, which was another big player in the ticketing space. They're integrating that acquisition. Ultimately, in the back half of the year, they're going to shut down Ticketfly completely and rely on Eventbrite Music. That'll present some near-term challenges.
But I like CEO Julia Hartz. She's focused on the forest, not the trees. A lot of great language in the call and presentations. They're focusing on years, not quarters. She's our kind of CEO. Another interesting little side note there, because this is a global business, it was nice to see that they added Mercado Pago as a payment provider for their Latin American business.
All in all, to me, it's a business I like. I do own some shares. I'm looking at this pullback with some greed because I think there's a great market opportunity here for a business that is run very much in line with the things that we look for here.
Hill: There are a lot of different industries that we talk about where we say, "Look, there's going to be more than one winner in this space." There'll be more than one winner when it comes to event ticketing. But it seems like there's not going to be a ton of winners. How do you feel about Eventbrite -- when it comes to buying tickets to an event, there are a lot of different platforms out there. It really seems like, in five or 10 years from now, there's going to be fewer dominant players than we have right now.
Moser: I think you're right. I think that's why we saw some of the consolidation there with the Ticketfly acquisition, for example. Where Eventbrite focuses primarily is that smaller-to-mid-market event management. They're not focused on these big concerts and events. They're trying to help the smaller bands and events and whatnot gain some traction and have some low-cost ways to promote their events. They do focus on a particular market opportunity, which I'm encouraged by. And it's a big market opportunity when you look at it from a global perspective. They continue to do the right things.