After a second day of heavy trading, Live Nation’s stock has dropped 13 percent following a report in the New York Times about the company’s Ticketmaster division, an 'oversold' rating by a Wall Street firm and overall volatility in the stock market.
The stock was trading at $36.61 after the market closed Tuesday (April 3), down 4.9 percent from Monday’s close of $38.17. Monday’s closing price was down 9 percent from Thursday’s closing price of $42.14, in effect wiping out $1.1 billion in value for the concert promotion company.
On Sunday, the New York Times published a long-anticipated report on competition within the ticketing space, alleging that "Department of Justice officials are looking into serious accusations about Live Nation’s behavior in the marketplace." The story cited several examples it said showed the company had used "threats" to maintain dominance in the ticketing space, although further examination revealed that some of the charges had been over-simplified.
The report was unclear if the DOJ is formally investigating Ticketmaster or just in regular communication with Ticketmaster and AEG, who’s former CEO Tim Leiweke helped draft the 2010 consent decree that allowed for the merger of Ticketmaster and Live Nation. Arguing the document is flawed, AEG has filed several complaints after losing clients to Ticketmaster, alleging the company used intimidation tactics to sign venue contracts with buildings in Los Angeles, Salt Lake City and Louisville, Kentucky. However, AEG officials also acknowledged their competing AXS ticket platform has technological shortcomings.
In a blog post after the Times story ran, Ticketmaster president Jared Smith said his company doesn't retaliate against venues who sign with competitors, claiming, "Live Nation is the most artist-focused company in the world, and misusing our relationship with artists to 'settle scores' with venues would be both bad business and counter to our core beliefs."
After the story published, Atlanta law firm Holzer & Holzer announced it would open an investigation into whether Live Nation violated securities law and was looking for clients who purchased Live Nation common stock between August 10, 2017, and March 30, 2018, and suffered a loss on that investment to serve as potential plaintiffs.
Sources familiar with Live Nation’s stock said the drop in price is being exacerbated by overall volatility in the stock market, with the Dow Jones Industrial Average flat or slightly down for nearly all of 2018. After President Donald Trump blasted Amazon on Twitter for what it pays the U.S. Postal Service to deliver packages (many say the criticism was politically motivated because Amazon boss Jeff Bezos also owns the Washington Post), Amazon's share price dropped 5 percent, wiping out $60 billion in value. The Amazon drop coincided with a sell off of tech stocks and overall jitters in the stock market due to concerns of a trade war with China and the country’s spiraling deficit, which has been worsened by a large tax cut and new federal spending increases.
On Monday, investment firm BNK said Live Nation’s stock had "entered into oversold territory" in an article on NASDAQ.com. The article said Live Nation had a Relative Strength Index reading of 29.7, falling just below the benchmark 30, with anything under that considered oversold. By comparison, the S&P 500 exchange-traded fund has a RSI reading of 38.4.
"A bullish investor could look at LYV's 29.7 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side” said the piece.