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mid-cap

Book Profits on This NASDAQ-Listed Online Services Provider – SEAT

Feb 24, 2022 | Team Kalkine
Book Profits on This NASDAQ-Listed Online Services Provider – SEAT

 

Vivid Seats Inc.

Vivid Seats Inc. (NASDAQ: SEAT) is an online ticket marketplace that connects fans to their favorite live events, musicians, and sports teams. Ticketing for sports, concerts, theatres, and comedy is provided by the entertainment industry's official ticketing partner.

Why should Investors Book Profits?

  • Continued Losses: Despite the increase in revenue, the company incurred a net loss (attributable to common shareholders) of USD 44.05 million in Q3FY21 compared to USD 426.08 million in Q3FY20 due to higher operating expenses.
  • Competition Risk: The company confronts severe competition in the ticketing market. It may not be able to maintain or expand current revenue, which might affect its financial position and results of operations.
  • Bearish Factors: Losses on asset dispositions, impairment of goodwill, and staff headcount reductions due to the pandemic are all variables that negatively influence investor sentiment.
  • Overvalued Multiples: On a forward 12-month basis – EV/Sales, EV/EBITDA, Price to Book and Price/Earnings valuation multiples of SEAT are overvalued against the software and IT services sector
  • Unfavourable Technical Indicators: The company's current market price was USD 11.31, lagging above the 50 and 200 DMA and approaching resistance. In addition, the 14-day RSI (~61.01) shows that the stock is in the overbought zone and maybe downtrodden from the current prices.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

SEAT's share price is currently leaning towards the 52-week high of USD 14.35. We have valued the stock using the EV/Sales multiple based relative valuation methodology and arrived at a target price of USD 9.36. Considering the continued losses, colossal market competition, overvalued multiples, unfavourable technical indicators, and current valuation, we recommend a "Sell" rating on the stock at the current price of USD 11.31, up 2.63%, as of February 23, 2022, at 9:48 AM ET.

 SEAT's 2-Year Technical Price Chart. (Source: REFINITIV, Analysis by Kalkine Group)

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.