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Why Live Nation Entertainment Shares Crashed in the First Half of 2020

By Anders Bylund – Jul 9, 2020 at 4:10PM

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The coronavirus crisis froze the live events industry in the spring of 2020. Nobody knows how long the curtains will stay closed.

What happened

Shares of Live Nation Entertainment (LYV -2.11%) fell 38% in the first half of 2020, according to data from S&P Global Market Intelligence. The leading ticket vendor and arranger of live events was essentially shut down by the COVID-19 pandemic.

So what

The Ticketmaster parent saw first-quarter sales fall 21% year over year because the social distancing guidelines of the coronavirus era made live concerts impossible in the middle of March. The company raised $1.2 billion of additional cash near the end of May to keep the lights on while the revenue-generating turnstiles are closed. Live Nation will not be generating any meaningful revenues until the concert circuit opens up again.

A hand doing the sign of the horns in the light of a spotlight, behind the word Cancelled.

Image source: Getty Images.

Now what

The company is trying to reschedule rather than issue refunds for events that were planned before the virus outbreak, and artists will be expected to shoulder a larger part of the financial risk associated with live events in the future. Live Nation is also trying some unconventional ideas, such as drive-in concerts and online live streams.

"Throughout all this, we are still motivated by the long-term potential of global live events," CEO Michael Rapino said in Live Nation's first-quarter earnings call. "Live Nation is in the best position in the live ecosystem to play long and to capture new opportunities, continue leading the industry into the future."

I'm sure that Rapino is right, and Live Nation doesn't have any competition to speak of in many of its largest markets. But the return to reasonable financial health could take years, so the low stock prices make perfect sense. You could make money on this stock in the long run, but this ticker is for extremely patient investors only.

Anders Bylund 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.

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