Eventbrite: The Pandemic Will Crush This Stock

Mar. 13, 2020 12:01 AM ETEventbrite, Inc. (EB)9 Comments


  • Social distancing will have a strong negative impact on Eventbrite revenue for 2020.
  • Chargebacks may result in a double-whammy for canceled events.
  • Revenue growth was already anemic before the onset of the pandemic.
  • I believe that Eventbrite is overpriced based on forward earnings estimates.
  • Looking for a portfolio of ideas like this one? Members of Digital Transformation get exclusive access to our model portfolio. Get started today »

The other day I wrote an article on Zoom Video (ZM), highlighting the opportunity presented by remote video conferencing during the coronavirus pandemic. Today, I am writing about Eventbrite, Inc. (NYSE:EB), a company at the opposite end of the spectrum. Eventbrite is a leader in event management. The company provides tools and incentives for creators to plan, promote and produce events. While Zoom Video provides a platform for remote communication which is an ideal product during pandemics, Eventbrite provides a platform for the promotion of live events and social interaction, not so desirable during pandemics.

Eventbrite serves mid-market creators

(Source: Eventbrite)

Eventbrite management has already accounted for some early event cancelations in its 2020 forward guidance that was published at the end of February, but I doubt that the company anticipated the full impact of the pandemic and the "social distancing" that most countries are now starting to employ in combating the coronavirus. Not only do I expect that there will be a severe impact on Eventbrite's top line due to event cancelations and lower levels of new business, but the company's business model also makes it vulnerable to chargebacks as I shall describe later.

In addition to the coronavirus, Eventbrite's business is already suffering from anemic growth and is dependent on M&A activity to grow, particularly in Europe. This is also problematic as the company has had difficulty integrating acquired companies in the past. For example, Eventbrite acquired TicketFly in 2017 but only managed to retain 70% of customers.

For all of the above reasons, I am giving Eventbrite a neutral rating.

The Rule Of 40

One industry metric that is often used for software companies is the Rule of 40. It is an industry rule of thumb that attempts to help software companies ascertain how to balance growth and profitability. For a further description

Join My Exclusive Service While the Price is Low ...

Digital Transformation is a once-in-a-lifetime investment opportunity fueled by the need for businesses to convert to the new digital era or risk being left behind. You can take advantage of this opportunity by subscribing to the Digital Transformation marketplace service. Tap into three high-growth portfolios, industry/subindustry tracking spreadsheets, and three unique proprietary rating systems. Don't miss out on the digital revolution. We are still in the early innings and there are plenty of high-growth investment opportunities out there waiting for you!

Start your 2-week free trial today!

This article was written by

Steve Auger profile picture
Invest in high growth software stocks now!

I have been trading stocks, commodities, and options for more than 25 years. I have honed my skills in quantitative analysis and various stock investment tools for 15 years at Portfolio123 and offer services as a consultant in stock portfolios. I also own the financial data service Equity Analytx which provides aggregated fundamentals for a wide range of industries.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (9)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.