Please ensure Javascript is enabled for purposes of website accessibility

Why Live Nation Entertainment Stock Dropped 25% in March

By Anne Burdakin - Apr 3, 2020 at 5:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The event promoter had us on the edge of our seats.

What happened

Shares of event promoter Live Nation Entertainment (LYV 0.82%) had a very active month of March. The stock price dropped, rose, then dropped again, finishing the month with an overall drop of 25%, as reported by S&P Global Market Intelligence.

What caused the roller coaster ride?

First, on March 10, the company announced the massive Coachella Music and Arts Festival in California was postponed until October due to the coronavirus crisis. A few days later, Live Nation canceled all events worldwide at least through the end of March. The stock slid about 50% from March 1 to March 18. 

Then the stock moved upward for about 10 days on the news that Liberty Media (BATRK 0.47%) fully repaid the Live Nation $130 million margin loan. Liberty Media owns approximately 69.6 million shares of Live Nation common stock, which equals a 33% ownership stake.

By the end of March, the net share-price loss was 25%.

Concertgoers making heart sign with their hands

Source: Getty Images

So what

Some market watchers say a fast decline of this magnitude may be overdone, presenting a buying opportunity for the right investor.

Citigroup analyst Jason Bazinet thinks the impact of COVID-19 may already be priced into the shares. According to him, the stock is becoming "increasingly attractive" and has enough liquidity to tackle a roughly 90% decline in revenue this year. The company is only estimating a 70% drop. On March 24, Bazinet upgraded Live Nation stock from sell to neutral.

Others agree that the stock has become attractive. In the past few weeks, two insiders (CEO Michael Rapino and board member Ping Fu) have disclosed share purchases, as has billionaire investor Mark Cuban.

Now what

The future of live events remains murky, but with the margin-loan repayment, Live Nation is in a good place financially to ride out the coronavirus crisis. 

Live Nation has proved to be well run, but there is no way to estimate when the company can get back to business as usual. Investors should keep Live Nation on watch lists, subject to new information about when concerts and festivals may resume. But even though the price has declined, the situation is too fluid and uncertain for immediate investment.

Anne Burdakin has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Live Nation Entertainment. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Live Nation Entertainment, Inc. Stock Quote
Live Nation Entertainment, Inc.
$99.32 (0.82%) $0.81
The Liberty Braves Group Stock Quote
The Liberty Braves Group
$27.61 (0.47%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.