Please ensure Javascript is enabled for purposes of website accessibility

Will a COVID-19 Vaccine Save Live Nation Entertainment?

By Howard Smith – Aug 25, 2020 at 11:06AM

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

With the concert scene shut down, the live entertainment company is burning cash at a rate of $185 million per month.

Live Nation Entertainment (LYV 3.65%), parent of Ticketmaster and Live Nation Concerts, has been negatively impacted as much as any business from the coronavirus crisis. Bans on large gatherings are likely to continue until the world's population has access to an effective COVID-19 vaccine. 

With no live events, the company estimates it is going through cash at an overall rate of $185 million per month, which means it will be out of free cash in about 10 months. So let's look at why the company sounded optimistic in its recent second-quarter earnings release on Aug. 5. 

live concert crowd cheering

Image source: Getty Images.

Live Nation expects its cash burn rate to continue through the end of 2020. As of June 30, the company has liquidity of $2.7 billion, including available debt capacity. The company believes it has enough to survive "until the expected return of concerts at scale in the summer of 2021, preceded by ticket sales earlier in the year."

Its optimism isn't just due to its balance sheet. The company said live music fans are showing that demand is intact by holding onto tickets from postponed events, rather than seeking available refunds. Its data shows that 86% of fans have held onto tickets to attend rescheduled shows. 

Live Nation said it expects "a robust outdoor summer season in 2021." Between the held tickets for rescheduled shows and festivals, and early ticket sales for festivals being held next year, the company said it has already sold 19 million tickets for 2021. 

This is good news for investors as long as 2021 plays out as the company expects. For that to happen, though, a COVID-19 vaccine will need to be available and effective. Without one, it's hard to picture filling up concert venues, and that is what Live Nation ultimately needs to survive. 

Howard Smith 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.
LYV
$77.77 (3.65%) $2.74

*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
329%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

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.