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blue-chip

One Online Service Provider to Punt On– SEAT

Feb 09, 2022 | Team Kalkine
One Online Service Provider to Punt On– SEAT

Vivid Seats Inc

SEAT Details

Vivid Seats Inc. (NASDAQ: SEAT): Vivid Seats Inc., formerly Horizon Acquisition Corp, is a marketplace that allows fans of live events to connect with third-party ticket sellers through its technology platform. The Company operates through two segments: marketplace and resale. Its marketplace segment acts as an intermediary between ticket buyers and third-party ticket sellers. It facilitates the sale of tickets by third-party ticket sellers through its Website www.vividseats.com and Vivid Seats native applications.

Recent Highlights:

  • Branding Via Sponsoring: On January 28, 2022, the company The San Francisco 49ers and Vivid Seats Inc (NASDAQ: SEAT), a technology platform that connects the ticket sellers to the thousands of viewers, announced an expansion and extension to their current partnership to provide the 49ers fans with access to a collection of travel packages all across the season, exclusively available on Vivid Seats marketplace. This will help to retain the customers in the longer term and reduce customer acquisition costs.
  • Multi-year deal renewal with ESPN: On January 27, 2022, the company renews a multi-year deal with ESPN to continue providing ESPN users and sports fans across the country with smooth access to one of the wide access of selectin of tickets.
  • Achieving the 100 millionth Ticket milestone: The company achieved the total number of its tickets sold to 100 million after delivering its seamless services throughout. On the ESG front, the company further gained traction when it donated USD 2 million since the start of CVOID 19 and even donated USD 0.10 million to MusiCares, after achieving this milestone. 
  • Acquisition of Betcha Sports: on December 13, 2021, the company announced the completion of the acquisition of Betcha Sports Inc. (“Betcha”), a real-money sports application with social gamification features that enhances fans' connection with their favorite live sports. The acquisition price was USD 25 million in cash upfront and the next tranches of USD 40 million of earnouts that it earned will be payable in a mix of cash and equity.

 Q3FY21 Results:

  • Increase in revenues: The company reported a staggering increase in revenues from negative USD 7.1 million in 3QFY20 to current revenues of USD 139.5 million in 3QFY21.
  • Loss reduction: the company further curtailed its losses to USD 1.8 million in 3QFY21 from the net loss of USD 40.2 million in 3Q FY20.
  • Increase in Gross Order Value: the Gross Order Value increased to USD 713.1 million in 3QFY21

Key Risks:

  • Price Wars and Scalability: The recent shift to the ‘Technology’ oriented solution from ordering groceries to tickets, etc have evolved this space and its players manyfold. With this, many young players are stepping in along with the deep-pocket players, inviting the inevitable price wars, resulting in the squeeze in profits. Further, the new technology always poses a threat with the arrival of anything new and cost-effective, making the current one obsolete hence the company has to be on its toes to keep innovating all the time.

Valuation Methodology: Price/Earnings Per-share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

On daily price chart, a positive RSI range shift spotted where 14-day RSI moved above 40, and stock has recorded a reversal from short-term suppost of 8.3 and moving towards its 21-day SMA.

Further, we have valued the stock using the Price/Earnings per share based on relative valuation methodology and arrived at a target price of USD 10.9. The current price of USD 8.92 is still showing a lot of room is left for the stock to be carried forward towards its target. But we would like to see the stock settle sometime before it takes off and ride it towards our profit target. Considering the improving financials and the acquisition impact, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 9.10 as of February 07,2022.

 

1-Year Technical Price Chart (as onFebruary 07, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.