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Why Eventbrite Stock Plunged 35.2% in March

By Steve Symington – Apr 4, 2019 at 9:02AM

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The live events leader left the market wanting more with its most recent quarterly guidance.

What happened

Shares of Eventbrite (EB -5.68%) fell 35.2% in March, according to data from S&P Global Market Intelligence, after the live entertainment specialist announced mixed fourth-quarter 2018 results and underwhelming guidance.

Eventbrite stock plunged nearly 25% on March 8 alone -- the first trading day after its quarterly report hit the wires. In that report, the company revealed its fourth-quarter revenue had climbed 21.1% year over year to $75.9 million, translating to a net loss of just under $13 million, or $0.17 per share. Analysts, on average, were anticipating a net loss of $0.13 per share on revenue of $73.2 million.

Man in suit watching red arrow crash through a cement floor

Image source: Getty Images.

So what

To be fair, the underlying drivers of Eventbrite's business appeared solid. Paid tickets climbed 17.6% to 26.7 million, and the company managed to swing to positive adjusted EBITDA of $7.3 million in Q4, compared to a $0.5 million adjusted EBITDA loss in the year-ago period.

"This increase highlights our ability to scale our business without a significant cost increase," elaborated CFO Randy Befumo in the company's shareholder letter.

The market was less impressed, though, by Eventbrite's guidance for first-quarter 2019 revenue of between $80 million and $84 million. That range was far below consensus estimates at the time for $91.3 million.

Now what

The company explained the guidance shortfall stemmed from headwinds related to the integration and migration of Ticketfly, which was acquired from Pandora for roughly $184 million in 2017, into the Eventbrite platform.  

"During this process, our team has been focused on migrating existing customers, which creates tremendous value for our business but does not result in near-term revenue growth," management explained. "We believe in this strategy because it will enable us to build the leading, global independent music platform."

The integration and migration work should be complete by the end of this year, after which Eventbrite expects revenue growth to accelerate (particularly in the North American music business) by early 2020.

Given Eventbrite's more modest growth in the meantime, however, it was no surprise to see the stock pull back last month in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Eventbrite, Inc. Stock Quote
Eventbrite, Inc.
EB
$6.81 (-5.68%) $0.41

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