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Stock of the Week Under $10: Vivid Seats (SEAT)

It’s not headline news anymore, because we saw it constantly in 2023, the concert market…aka Taylor Swift…is strong and shows no signs of weakening. As inflation eases and consumers find themselves with a little more disposable income, this market should continue to see a bright future. One company that is taking advantage of this concert/live event business is Vivid Seats.

As market prognosticators called for a recession in 2023, and consumer goods companies faced rocky times, one area that has stayed very strong is the travel and live event market. Need I even mention Taylor Swift…or the Kansas City Chiefs?  

Taking advantage of this strength, Vivid Seats (SEAT) is an online ticket marketplace for event tickets in the US. The market platform, which matches buyers and sellers, serves as a way for retail ticket supply to meet demand. Vivid also has a resale business where the company itself buys tickets and resells through other venues.

You may be more familiar with Vivid’s competition if you’ve purchased any tickets online, Ticketmaster, which is owned by Live Nation Entertainment (LYV). Vivid is attempting to build a loyal customer base itself via a customer loyalty program. The more tickets a customer sells or buys on the platform, they are rewarded with points which can be used to purchase tickets at future events. 

Like Live Nation, Vivid has seen strong growth this past year despite the above mentioned recession, and inflation concerns. It appears the U.S. consumer has remained strong enough to support a broad array of live events, especially in the post pandemic era. 

The shares of Vivid are trading at 14.6x earnings and 13.7x projected earnings, which is still relatively cheap for what is essentially a software platform that can scale up as events, and partnerships, are added to its roster. Shares are also trading at just 3x cash and 6.4x free cash flow.

In its latest earning release the company reported revenue has grown 20% YoY in the quarter. And, adjusted EBITDA was up 18% to $33.4 million. CFO Lawrence Fey said the numbers, “Reflect[ed] strong Vivid Seats execution against a robust market backdrop with broad-based demand strength across performers and teams.”

Vivid should continue to see growth in 2024 as interest rates ease and the inflation burden on consumers ebbs. Additional disposable income would be fuel to an already robust earnings picture for the company. 

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SEAT shares were trading at $5.87 per share on Tuesday afternoon, down $0.15 (-2.49%). Year-to-date, SEAT has declined -7.12%, versus a -0.08% rise in the benchmark S&P 500 index during the same period.

About the Author: Jay Soloff

Jay is a former professional market maker who cut his teeth trading on the floor of the CBOE. With more than 20 years of experience trading and investing, his focus is on making professional strategies accessible to everyone, which is exactly what does in his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.


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