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Why Eventbrite Stock Was Falling Today

By Jeremy Bowman - Feb 28, 2020 at 2:00PM

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The online-ticketing company saw shares stumble, saying the coronavirus was causing some event cancellations in its fourth-quarter report.

What happened

Shares of Eventbrite, Inc. (EB 6.03%) were tumbling today after the event ticketing specialist said the COVID-19 scare was causing some cancellations, which overshadowed a better-than-expected fourth-quarter earnings report.

The stock was trading down 12.9% as of 12:32 p.m. EST.

People with their hands in the air at an outdoor concert.

Image source: Getty Images.

So what

For the fourth quarter, Eventbrite's revenue rose 9% to $82.7 million, driven by 18% growth in the Self Sign-On channel, which allows smaller companies to use the service. That beat expectations of $78.8 million.  

On the cost side, operating expenses rose 27% to $68.6 million as the company invested in areas like product development and sales and marketing, weighing on the bottom line. It reported an adjusted EBITDA loss of $2.2 million, down from a profit of $7.3 million in the quarter a year ago, but its loss of $0.16 per share was better than estimates of $0.21.

In its letter to shareholders, management said: "We are encouraged by the progress we made in 2019. We grew our Self Sign-On channel and realigned and refocused our resources to build for our most valuable creator subsets."

The company also completed the Ticketfly migration, following its earlier acquisition, and is working at building out music business. Still, investor focus remained on the threat from COVID-19, the disease caused by a virus in the coronavirus family.

Now what

In its outlook, the company said it had seen "early evidence of event cancellations that appear to be related to the coronavirus and we expect the outbreak will impact live events and attendance in the near-term." Unlike many companies, it did take the impact of the coronavirus into account in its guidance.

As a result, it's calling for revenue growth of just 3% to 8% for the first quarter to $84 million-$88 million, below estimates at $90.2 million. For the full year, it expects top-line growth of 5% to 10% to $342 million to $359 million, worse than expectations of $365.3 million. On the bottom line, its sees a midpoint of -$2 million in adjusted EBITDA for both the first quarter and full year.

Eventbrite stock has struggled since its 2018 IPO. While its current problems may be caused by coronavirus concerns, it's going to be difficult to mount a comeback with single-digit revenue growth and continuing operating losses.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Eventbrite, Inc. The Motley Fool has a disclosure policy.

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