Live Nation, a behemoth of the live entertainment industry, is facing a storm of challenges. A recent government lawsuit alleging antitrust violations, a massive data breach at its subsidiary Ticketmaster and ongoing fan frustration are casting shadows on the company’s financial future and potentially its stock price.

Live Nation has faced headwinds in the past, but these latest developments illustrate a particularly uncomfortable road ahead for the company — along with plenty of uncertainty and potential volatility for investors.

DOJ’s lawsuit to end ‘monopolistic control’ over events industry

The most significant threat to Live Nation comes from a U.S. Department of Justice (DOJ) lawsuit filed in April 2024. The DOJ accuses Live Nation, which merged with Ticketmaster in 2010, of abusing its dominant market position to stifle competition and inflate ticket prices.

The allegations are two-pronged. First, the DOJ claims Live Nation uses its control over concert venues to pressure artists into using Ticketmaster exclusively. This shuts out competing ticketing platforms, limiting consumer choice. Second, the lawsuit alleges Live Nation leverages its size and dominance to impose unfair fees and restrictive terms on artists and fans alike.

The DOJ alleges that Live Nation’s anti-competitive practices exercise “monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters and venue operators,” Attorney General Merrick B. Garland wrote in a release by the DOJ.

Live Nation denies these claims. The company argues that its practices benefit artists by providing a one-stop shop for touring logistics and maximizing ticket sales. Live Nation also maintains that Ticketmaster’s fees are transparent and comparable to competitors.

More competition would be a positive change for consumers, who could arguably benefit from lower ticket prices and potentially more ticket platform choices.

But the lawsuit could spell bad news for Live Nation. The case could force the company to divest from Ticketmaster, fundamentally altering Live Nation’s business model and revenue stream. Regardless, the legal battle is likely to be long and expensive, which could strain the company’s resources and create further uncertainty for investors.

A long history of fan frustration

Live Nation, particularly Ticketmaster, has long faced fan outrage over its ticketing practices.

The issue isn’t new. In the 1990s, Pearl Jam famously took on Ticketmaster, accusing it of unfair pricing and limited ticket availability. The Seattle-band even traveled to the White House to discuss the company’s anti-trust violations with then-President Bill Clinton.

Nearly 30 years later, in 2023, Taylor Swift’s battle with Ticketmaster over her 2023 “Eras Tour” reignited the conversation. Fans faced daunting online queues, exorbitant fees and scalpers snapping up tickets within seconds.

Adding fuel to the fire, in May 2024, Ticketmaster confirmed a security breach that exposed millions of users’ data, including names, addresses and credit card information.

While the full impact remains unclear, Live Nation said that the hacker who accessed the data was purportedly selling user information on the dark web. The breach has only helped erode consumer trust in Ticketmaster and Live Nation even further.

Lost revenue streams: Cancellations and the changing landscape

Extrinsic forces may also be working against Live Nation as the overall live music industry has shown signs of slowing after over two years of breakneck growth following pandemic lockdowns.

High-profile artists like Jennifer Lopez and the Black Keys recently cancelled their tours. Lopez’s North American shows were canceled amid reports of underwhelming ticket sales, though a statement from Live Nation said the star is taking time off to be with family and friends. Meanwhile, the Black Keys said they’re looking to swap their arena shows for smaller, more intimate venues.

In April, movie and concert admissions prices were up 3.4 percent year over year, the lowest reading since 2021 — and the second month in a row showcasing a slowdown, according to data from the U.S. Bureau of Labor Statistics.

As companies like Starbucks and Target continue to cite a consumer spending pull back, the live music machine could be cooling too, especially amid elevated ticket prices.

However, Live Nation’s first quarter 2024 earnings report released May 2024 paints a very different picture. Confirmed shows for large venues, such as stadiums and arenas, were up double-digits since the same period last year. Live Nation also reported the sale of approximately 77 million tickets on Ticketmaster worldwide during its first quarter.

Live Nation’s stock outlook and other music companies

Despite headwinds, Live Nation is still a massive player in the live entertainment industry. The company reported its biggest first quarter ever in May 2024, with revenue up more than 20 percent over the same time last year, at $3.8 billion. Concert revenue alone was up 26 percent to $2.9 billion.

The company also ended the quarter with $6.5 billion in cash, including $1.4 billion in ticketing client cash. Clearly,  Live Nation possesses the resources to weather some storms and potentially emerge stronger.

The company’s stock remained relatively resilient during the bear market of 2022, and was only down 11.5 percent from its 2024 high as of June 3. However, the stock price is likely to remain volatile until Live Nation’s legal situation is resolved.

Live Nation’s reputation might be tarnished, but if demand for live events remains strong, the impact of other challenges could be mitigated.

Investors should keep a close eye on the DOJ legal battle. And you might look for other signs of life in the space, with companies like Madison Square Garden Sports (MSGS) and Eventbrite (EB).

Alternatively, you might consider looking at other ways to invest in the music industry, such as streaming services like Spotify (SPOT), or musically-related companies like iHeartMedia (IHRT) and Warner Music (WMG).

However, like any other thematic investment, there are risks. Before investing, review all available information about a company’s financial situation to determine whether the investment is a good fit for your portfolio.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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