1) Vivid Seats Inc. (NASDAQ:SEAT)
Short % of Float (15 August 2024): 32.16%
Number of Hedge Fund Holders: 24
Vivid Seats Inc. (NASDAQ:SEAT) is an online ticket marketplace for connecting fans to live events and artists. The company is an official ticketing partner by brands in the entertainment industry offering tickets for sports, concerts, theatres, and comedy.
Short sellers believe that the company’s stock price is expected to struggle moving forward as a result of challenges, such as venue downsizing and event cancellations. This indicates that Vivid Seats Inc. (NASDAQ:SEAT) might face the risk of lower consumer demand. As a result, there are concerns regarding the company’s ability to meet its growth expectations for the upcoming year. Additionally, there was an increase in competitive performance marketing intensity. This might impact its ability to expand the market multiple.
Moreover, there are expectations of a downturn in the company’s activity within performance marketing channels. This can result in a decrease in its GOV and a marginal fall in revenue projections for 2024 and 2025.
That being said, Wall Street analysts are quite optimistic about the company’s growth prospects. Vivid Seats Inc. (NASDAQ:SEAT)’s loyalty program and engagement initiatives resulted in a lot of repeat orders over time. The analysts believe that a strategic focus on profitable growth and the anticipation around an improved competitive landscape in 2025 should help its stock price. Analysts are quite optimistic about its inorganic growth strategies, which should help improve margins.
For example, Vivid Seats Inc. (NASDAQ:SEAT)’s acquisition of Vegas.com and introduction of the Game Center app should act as margin-accretive strategies that can drive new and returning users with high conversion rates and strong returns on advertising spend. In 2Q 2024, the company refinanced and up-sized its term loan and was able to reduce its interest rate while bringing $125 million of cash to its balance sheet. This cash balance is expected to be deployed across share repurchases and strategic M&As. For 2024, Vivid Seats Inc. (NASDAQ:SEAT) is expecting its marketplace GOV of between $4.0 billion to $4.3 billion, with revenues expected to remain between $810.0 million to $830.0 million.
Analysts at Benchmark reissued a “Buy” rating on the shares of Vivid Seats Inc. (NASDAQ:SEAT), issuing a $15.00 price target on 30th July. By the end of 1Q 2024, 24 hedge funds included the company in their portfolios with total stakes amounting to $52.7 million.
While we acknowledge the potential of SEAT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
