Shares of Ticketmaster parent company Live Nation Entertainment (NYSE: LYV) plunged this week, falling 11.2% through Friday trading at noon ET, according to data from S&P Global Market Intelligence.
Live Nation merged with Ticketmaster in 2010, creating a dominant ticketing company for the highest-profile concerts. However, this week The Wall Street Journal reported the Department of Justice is preparing to sue Live Nation for alleged antitrust violations.
Currently, Ticketmaster has about 80% market share for primary ticket sales at the biggest venues in the country, and has exclusive contracts with many of the biggest stadiums. Although the DOJ didn’t seek to block the initial 2010 merger under the Obama administration, the Biden administration has taken a tougher stance on corporate monopoly power. Some bad publicity for Live Nation in recent years hasn’t exactly helped the company’s cause, either.
One particular moment drew the ire of Taylor Swift fans in November 2022, when Ticketmaster’s site crashed during the Eras Tour presale. And with inflation top of mind for so many consumers over the past couple of years, those hefty add-on fees to advertised ticket prices likely seem more and more egregious.
The Biden administration has repeatedly gone after corporations for raising prices, with President Joe Biden calling out major snack and food companies for engaging in “shrinkflation,” during the Super Bowl and then in his State of the Union address this year. Shrinkflation is when packaged food companies don’t raise prices but put a lower-than-advertised quantity in packaged food.
Ticketmaster, unsurprisingly, has denied claims that it abuses its power, noting it does in fact have competition and claiming the company has actually lost market share in ticketing since 2010, not gained it, and that the majority of its fees go to venues.
Analysts also don’t appear as concerned. Benchmark analyst Matthew Harrigan wrote in a note that he wouldn’t be surprised if the lawsuit didn’t materialize at all, attributing the DOJ suit as election year posturing. The analyst also kept his buy rating on the stock with a Street-high $130 price target, amounting to 45% upside from today’s beaten-down price.
Still, the uncertainty in the aftermath of the WSJ story is clearly weighing on the stock this week.
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Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool recommends Live Nation Entertainment. The Motley Fool has a disclosure policy.
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