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Eventbrite gave a surprise to its shareholders on Thursday: a plane ticket aboard a stock market crash tower. The company's shares have lost more than a quarter of their value due to disappointing earnings and poor prospects.
First quarter sales revenue grew 9% – below the 21% rate for the full year of 2018 – to $ 81.3 million, down from $ 83 million expected by badysts. The company also lost 13 cents a share, more than the 8 cents loss announced by badysts.
Eventbrite's second-quarter revenue guidance was more important for investors. Sales are expected to be between $ 74 million and $ 78 million, well below the $ 82.4 million forecast by Wall Street.
In addition to this disappointing financial news, Eventbrite also indicated that it would start looking for a new CFO, as the person occupying this position, Randy Befumo, will become responsible for the strategy.
Befumo said he was "delighted to play the role of strategy to help the [CEO Julia Hartz] and the team. Nevertheless, whenever a company with disappointing results says that its CFO is stepping down, shareholders are even more disturbed.
The net impact of all this news was not pretty. Thursday's Eventbrite shares fell 27.1 percent to $ 17.60 after falling to $ 15.30 per share immediately after the opening bell, 36 percent below its closing price on Wednesday.
Founded in 2006, Eventbrite aims to facilitate the organization and distribution of tickets for free live and paid events, a digital way to help people connect face-to-face rather than on social media. After its IPO in September, the company's shares climbed from their initial price of $ 23 to $ 30, before rising briefly above $ 40 a week later.
Since then, as has been the case with many IPOs in the technology sector, which experienced a spectacular explosion on the first day, Eventbrite's share price has been slowly declining. In March, Eventbrite's shares fell by 25% in the wake of the publication of its results for the last quarter of 2018. This sale was also boosted by results below investor expectations.
To date this year, Eventbrite has dropped 42%, a performance lower than other mainstream consumer technology companies released in 2018, including the Spotify music streaming service. down 4.5% since the beginning of the year) and the Sonos speaker manufacturer (down 12.1%).
Early Thursday, SunTrust and Stifel both lowered their price targets for Eventbrite shares from $ 28 to $ 20 per share, while RBC Capital lowered its target from $ 30 to $ 22 per share. The three companies said that Eventbrite was struggling to integrate Ticketfly, which she had acquired from Pandora for $ 200 million in 2017, at her own music event ticketing service.
"We faced a daunting challenge when we bought Ticketfly," Hartz said during a earnings conference call, in which she said the Ticketfly service would be "discontinued" in the second half of 2018 "This has resulted in a complex and tedious process integration."
Ticketfly, like Eventbrite, focused on the event ticket market, working with independent bands and festivals. Since the acquisition, Eventbrite is using to bring the musicians who use Ticketfly on its own ticketing platform, a task complicated by a data breach that revealed personal information on 27 million Ticketfly accounts.
Hartz maintains that Eventbrite's challenges in integrating Ticketfly are temporary and that its long-term position in the ticketing market remains strong. Although badysts have reduced price targets this week, some have shared this view. Mark Mahaney, of RBC, maintained his outperformance rating, citing "Eventbrite's market opportunities, competitive position and long-term business model."
Meanwhile, Eventbrite's stock market performance over the last few months offers a cautionary lesson to investors who wish to invest in the current parade of IPOs in the technology sector in 2019, since their debut recent such as Lyft, Pinterest digital signage panel and video conferencing service. Zoom on upcoming offers such as Uber and the Slack Workplace Messaging Service. The attention and enthusiasm of brand-name technology companies can help generate strong rebounds from the start. But once the hype fades and challenges emerge, investors can quickly shift their focus – and capital – to the next hype.
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