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Why Eventbrite Stock Plunged Today

By Jeremy Bowman - May 12, 2020 at 1:53PM

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COVID-19 led to mass cancellations of events, but even with that expectation baked in, the event-management company's first-quarter performance was disappointing.

What happened

Eventbrite (EB 6.03%) stock dove Tuesday after the company reported plunging revenue and a ballooning loss in the first quarter. Live events around the world have been canceled due to COVID-19, so investors had expected a dismal report from the event-management and ticketing specialist, but the degree of the pandemic's impact still surprised them.

Eventbrite shares were down by around 20% as of 1:35 p.m. EDT.

People at a concert with their hands in the air as the sun sets in the background

Image source Getty Images.

So what

Acknowledging that its business has been severely impacted by COVID-19 and the social-distancing measures being taken to stem its spread, Eventbrite said revenue in the first quarter fell year over year from $81.3 million to $49.1 million, which was well below estimates of $71.9 million. Results were impacted by a $19.1 million increase in refunded ticket fees, refund reserves, and allowance for bad debts.  

Those charges also made up nearly all of its adjusted EBITDA loss of $119.6 million, which compared to an adjusted EBITDA profit of $4.1 million in Q1 2019. Similarly, its GAAP loss per share widened to $1.71. That compared to a GAAP loss of $0.13 per share a year ago, and was much worse than analysts' consensus expectation of a $0.24 per share loss.

Eventbrite has taken a number of steps to shore up its financial position recently, including reducing operating expenses by $100 million and receiving up to $225 million in term loans from Francisco Partners, a private equity firm. 

Now what

Management said it was focusing its strategy on delivering a self-service creator experience for online events and small gatherings with strong unit economics, and said that sales trends had improved since the low point in mid-March. However, the company expects restrictions on live events and other social-distancing protocols will impact its business for several quarters. It forecast a substantial decline in revenue for the year. 

Given that the company was struggling to turn a profit even before the advent of the crisis, it's not surprising that its stock is tumbling today.

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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