Why Analysts Are Arguing That Eventbrite is Undervalued


Investors of this one tech IPO have ended up losing a lot of their money, but analysts are now arguing that this company is undervalued and poised to stage a comeback.

Eventbrite (NYSE: EB), a tech platform which helps sell tickets to live events, ended up falling almost 40 percent so far in 2019 since it’s IPO. However, a number of Wall Street analysts have begun coverage of the stock, giving it a “buy” rating and arguing that a turnaround is likely.

Analyst Ryan Sundby at William Blair wrote in a note to clients that the recent pullback of Eventbrite’s share price is “an attractive opportunity” for long-term value investors, especially in light of the company’s growth prospects.

Beginning their coverage of the stock on Monday, Sundby gave Eventbrite an “outperform” rating but doesn’t have a specific target price for the stock.

Now is a good “entry point for long-term investors given the duration of the company’s above-average growth prospects and distinctive operating capabilities as resources eventually shift focus back to growth. Management intends to reinvest the majority of this growth to enhance product development and sales-and-marketing capabilities,” Sundby wrote according to Barrons. “We expect earnings before interest, taxes, depreciation and amortization margin expansion to be relatively muted during this time frame. Over the longer term, as the company begins to leverage these growth investments, we expect Eventbrite’s Ebitda margins to migrate toward the midteens.”

Eventbrite first surged in price when it went public in September 2018, rising to almost $40 per share as the company was planning to expand into the “midmarket” sized events, whose tickets represent much larger profit margins than small-sized local events.

Out of the four other analysts that have ratings on Eventbrite, three of them have a hold rating, while only one other has a “buy” rating. RBC Capital Markets was the only institution to have a bullish opinion on the stock, giving Eventbrite a price target at $19 per share.

That’s still well below the initial IPO price at $23, as well as the $36 at which the stock opened during its first day on the markets. Sundby argues that he expected double-digit “medium-term” growth for the tech company, but that the short term isn’t likely to see any impressive gains.

Shares of Eventbrite ended up jumping 6 percent in response to the good news. Eventbrite jumped over 50 percent in a single day when it first went public in late 2018.

However, since then, the company has had a turbulent stock price, which shares suddenly tanking in March 2019 as the company’s stock fell by over 50 percent. Time will tell whether or not the stock will make a comeback in the months to come.

Eventbrite Company Profile

Eventbrite Inc is a United States based event technology platform. It is engaged in creating a platform to enable creators to solve many challenges associated with creating live experiences.

The company platform helps to plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales. Geographically, it generates maximum revenue from the United States. – Warrior Trading News