Monday Live Nation Entertainment shares soared over 6 percent, recovering some of its losses of the past month. (Track Live Nation Here)
A number of factors contributed to this jump in the stock, starting with the headline that the recession is officially over, a sign consumers may be willing to spend on concert tickets.
This is a new direction for a stock that's been dogged by concerns about weak consumer spending. (Earlier this month Live Nation shares plummeted on a downgrade by Stifel Nicolaus analyst Ben Mogil.)
In July the stock plummeted after CEO Michael Rapino reported that ticket sales dropped five percent in the first half of the year.
Investors are digesting news that Rapino made on Thursday at a Merrill Lynch conference, revealing that July and August concert sales were stronger than earlier in the year, bringing the company close to meeting a reduced profit forecast it gave in July. The good news: ticket sales in July and August were robust enough to bring total ticket sales to down just 1 percent from a year ago. The bad news: discounting will cut into revenue.
After Rapino's presentation he spoke individually to a number of analysts, clarifying that the all-important summer concert season shaped up to be better than everyone had feared. David Joyce, Managing Director of Miller Tabak's Media Equity Research says investors are still haunted by fears that the fourth quarter schedule and attendance will be light, but Rapino reassured that the fourth quarter is far less important than the summer. Now everyone's paying attention to the spring quarter, when consumers are expected to return in force.
Another factor: Joyce says Live Nation Entertainment has been "overly punished," with a lot of traders shorting the stock. One factor driving the stock higher -- a lot of short covering today. The company's earnings announcement is on November 10 — we'll see if Rapino has any more guidance to offer on the company's direction then.
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