What happened
Shares of Ticketmaster parent company Live Nation Entertainment (LYV -1.68%) are rocking the joint on Wall Street today. The stock rose by roughly 15% after the business reported impressive first-quarter sales on Thursday evening.
So what
Live Nation posted strong sales figures and record results, driven by unprecedented global demand for live events.
Analysts had anticipated earnings per share (EPS) of $0.41 and revenue of $2.28 billion. However, Live Nation delivered a loss per share of $0.25 and revenue of $3.13 billion, showcasing robust revenue growth compared to the same period last year. Sales soared by 73%.
Live Nation CEO Michael Rapino emphasized the strength of the live events market, stating, "What is clear as we look at our results and operating metrics is that global demand for live events continues to reach new heights -- demand has been growing for a long time and is showing no signs of letting up."
However, it's worth noting that $47.4 million of net income was attributable to "noncontrolling interests," leaving a net loss of $3.2 million for common shareholders. The company has nearly 600 subsidiaries in which Live Nation holds less than 49% ownership.
Now what
Trading at 10 times free cash flow and 0.9 times sales, Live Nation Entertainment looks like a good value, but its complex company structure may deter some investors. The substantial amount of profit-sharing with venues, event arrangers, and other frontline organizations looks a lot like another category of operating costs under a different name.
While the stock has potential due to impressive sales and rising consumer interest in its ticket sales, Live Nation's convoluted setup and the lack of shareholder-friendly accounting policies may be reasons to stay away from this investment idea.
