Are Live Nation Stock's All-Time Highs Warranted?

The stock hit a fresh record high on Monday

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Live Nation Entertainment, Inc. (NYSE:LYV) is an American global entertainment company that is comprised of Ticketmaster, Live Nation Concerts, and Live Nation Sponsorship. LYV promotes, operates, and manages ticket sales for live entertainment in the United States and internationally. Live Nation Entertainment also owns and operates entertainment venues and manages the careers of music artists.

On Thursday, Sept. 23, Live Nation Entertainment announced the promotion of Jenifer Smith to Head of Urban Tour Marketing & Strategy. Smith will lead Live Nation’s Urban Tour Marketing team supporting all marketing efforts for their roster of R&B and Hip-Hop tours within the Concerts division.

Live Nation stock is up 70% year-over-year and yesterday touched a record high of $96.50, capping off four-straight days of wins. LYV is looking to snap this streak today, however, and was last seen down 0.7% at $93.64. Several trendlines sit just below and could emerge as support, however, including LYV's 60-day moving average, which acted as a floor in late August through September. 

lyv sept 28

From a fundamental perspective, Live Nation Entertainment continues to suffer from the Covid-19 pandemic’s impact on the live event industry. LYV’s trailing 12-month revenues have decreased a massive 89% compared to fiscal 2019 revenues, and LYV's trailing 12-month net income is still down by nearly $1.5 billion since fiscal 2019.

Although the potential recovery could be big, Live Nation stock has already priced in the best case scenario for the company over the next few years with a forward price-earnings ratio estimated at 232.56 and LYV's price-sales ratio coming in at 14.44. In general, the risk-reward potential for LYV is not very attractive given the stock’s significant growth over the past year. In other words, it doesn’t get much riskier than buying a stock at its peak when the company is still recovering from its worst financial year on record.

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