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Bear of the Day: EB (Eventbrite)

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Eventbrite (EB - Free Report) is a Zacks Rank #5 (Strong Sell) that offers a platform allowing users to provide online event planning services. The company publishes, promotes and sells tickets through social networks and e-mails.

The San Francisco company was founded in 2008 and IPO’d in 2018. Eventbrite has over 1100 employees and has a market cap of $770 million.

The company and the stock have a somewhat depressing problem in the fact that a lot of events are cancelled because of the pandemic. For those working events that the company is promoting, there is little interest as fear has control of the consumer. While economies have reopened, there is little evidence that the pent-up demand will help the company get to where it was before the pandemic.

Shift of Focus

Even before the pandemic the company was struggling to impress investors. After an IPO debut that topped out at $40, the company traded in a range between $15-20 before falling under $10 after the lockdowns.

The company decide to focus on its most valuable customers which were self-service event creators. The word of mouth viral nature of that business allows a reduction of costs and growth in their most profitable area.

The bull case would point to the shift as a reason the company will survive the pandemic and come out stronger on the other end, but with economies shutting down again due to more cases in COVID-19, there are uncertainties on when live events will come back.

Earnings and Estimates

On May 11th, the company reported a Q1 EPS miss of 489%. Revenue came in with a big miss as well, with the company seeing $49.1 million v the 70.5 million expected.

While the company has seen a bounce back in online events and paid ticket volume, analysts have continued to lower estimates. Over the last 90 days, estimates have fallen from -$1.35 to -$2.64 for the current year. Estimates have ticked slightly higher for next year, but that is taken into consideration that we will be free of the pandemic.

Technical Take

The stock tried to break above $12, but that idea was rejected and the stock is below the 50-day moving average. The lows of the year are $5.71 and another bad quarter could force a break of the $8 level and a trip to retest those lows. For the bulls, a move over $11 would be a good sign.  

In Summary

There are plenty of stocks to choose from that are making new highs every day. Eventbrite should be avoided until the pandemic is over and bearish technicals are broken. If the company can come out of this mess alive, there might be hope in the very long-term.

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