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Why Live Nation Stock Popped Today

By Evan Niu, CFA – Apr 27, 2020 at 2:56PM

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Saudi Arabia's sovereign wealth fund bought a passive stake in the live entertainment company.

What happened

Shares of Live Nation (LYV -0.73%) have popped today, up by 10% as of 1:50 p.m. EDT, after Saudi Arabia's sovereign wealth fund disclosed that it had acquired a 5.7% stake in the live event specialist. The stake is valued at around $500 million.

So what

In an SEC filing, the oil-rich nation's Public Investment Fund (PIF) said it had scooped up over 12.3 million shares, representing roughly 5.7% of Live Nation's 215.2 million shares outstanding. That makes Saudi Arabia the company's third-largest shareholder. Liberty Media remains Live Nation's largest shareholder, with 69.6 million shares, or a 33% stake.

People at a music concert with bright lights emanating from the stage and obscuring the musical act

Image source: Getty Images.

The PIF bought the shares in the open market, so Live Nation did not receive any of the cash directly or raise any capital. Live Nation has taken steps to strengthen its financial position to weather the COVID-19 pandemic, which has shut down all manner of live events like music concerts. 

Now what

Live Nation has been hit hard by the novel coronavirus outbreak, with shares down over 40% year to date. Meanwhile, PIF has signaled that it is looking for opportunistic investments that may bounce back once the world beats COVID-19. PIF head Yassir al-Rumayyan said earlier this month that PIF was looking in various sectors, including entertainment. The fund recently took an 8.2% stake in cruise operator Carnival.

Live Nation said earlier this month that it had amended debt covenants while increasing its revolver by $120 million, bringing total available debt to $940 million. Including current cash, Live Nation now has $3.8 billion in total liquidity available.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Live Nation Entertainment. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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