Leading live entertainment company Live Nation's (LYV) shares have soared in price over the past months on rising attendance at live events and concerts. However, the company's shares slipped following a tragedy at a recent Houston music festival because it is facing multiple lawsuits regarding its alleged mismanagement of the event. In addition, given LYV's negative profit margins and lofty valuation, will the stock be able to maintain its rally? Let's discuss.The Beverly Hills, Calif.-based Live Nation Entertainment (NYSE:LYV) is the world's leading live entertainment company, comprising global market leaders Ticketmaster, Live Nation Concerts, and Live Nation Sponsorship. The company owned, operated, and leased 155 entertainment venues in North America and 76 entertainment venues worldwide as of December 31, 2020.
The company's shares have surged 40% in price over the past three months and 18.6% over the past month on the back of better-than-expected financial results in its last reported quarter. In addition, with solid progress on the vaccination front, live events are rebounding, and people are more eager to attend in large numbers. This has boosted LYV's revenue growth lately.
However, the stock fell 5% in price on Monday after the LYV-organized Houston music festival ended in tragedy, with eight people killed and hundreds more injured. Following the incident, multiple lawsuits were filed against the company. We think this might have a detrimental influence on the company's price performance in the coming weeks.