We recently compiled a list of the 10 Best Leisure Stocks To Buy Now. In this article, we will look at where ELive Nation Entertainment, Inc. (NYSE:LYV) stands against the best leisure stocks to buy now.
In recent years, the leisure market has experienced remarkable growth. According to Market Research Intellect, the size of the global leisure market was estimated at $1.46 trillion in 2023 and is projected to expand at a compound annual growth rate of 21.8% from 2024 to 2031, when it will have grown to $8.6 trillion.
Along with growth, according to the YouGov survey, there were also notable changes in the leisure and entertainment industry in 2023 due to changing customer demands and technological breakthroughs. Even though 81% of US and 79% of UK customers recognize the value of museums, more than half of them only occasionally visit them. On the other hand, only 5% of people in the APAC and UAE skip theme parks, compared to 30% in North America.
While out-of-home entertainment expenses are on the rise, 13% of customers intend to spend more. Additionally, 36% of viewers find advertisements entertaining, and 36% of them are using virtual reality. In the United States, 10% prefer to buy movie tickets in advance, while 27% are concerned about how AI breakthroughs may affect professions, notably in information technology and accounting.
In the meantime, gambling is changing; 70% of US gamblers are open to sports betting with AI assistance, and cryptocurrency betting is becoming more popular in the US and the UK. As we have mentioned in our article, “10 Best Sports Betting Stocks to Buy Now,” generative AI is projected to dramatically impact sports betting in the next 12-18 months.
As per YouGov study, with 10% of UK consumers possessing smart devices and 24% looking at second-hand equipment, the fitness industry has also experienced growth. In general, live events such as food and drink festivals remain popular; even with safety concerns, 45% of attendees want to participate in 2024. Lastly, a shift in consumer views is evident in the rise of dynamic pricing, particularly in the US, where 54% of consumers are willing to pay more to support artists.
On the other hand, the size of the global leisure travel market was valued at $340.31 billion in 2022 and is projected to grow at a CAGR of 22.6% from USD 417.3 billion in 2023 to $2129.96 billion by 2031, as per SkyQuest.
Regionally, North America has been the market leader for leisure travel, especially the United States and Canada. However, when it comes to the global leisure travel industry, Asia-Pacific is expanding at the fastest rate. Countries in Southeast Asia, such as China and India, are major destinations for tourists in the area.
Amid the growth, a most recent Longwoods International tracking study of American travelers indicates that 39% of them plan to go abroad for leisure over the next 12 months. Furthermore, 34% of those who plan to travel abroad for leisure say they will travel abroad more this year, 50% plan to take about the same number of such trips, and only 16% say they would travel abroad less.
Amir Eylon, President and CEO of Longwoods International, stated that the expected boost in international travel by Americans is impressive, given lingering concerns about inflation and the financial health of the U.S. consumer. Moreover, he revealed that it is further evidence that American travelers see COVID-19 fading away in their rear-view mirror.
Methodology:
We sifted through holdings of leisure ETFs and online rankings to form an initial list of 20 leisure stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
Live Nation Entertainment, Inc. (NYSE:LYV)
Number of Hedge Fund Holders: 50
Revenue Growth Rate (year-over-year): 36.38%
Live Nation Entertainment, Inc. (NYSE:LYV) is the world’s largest live entertainment company, operating as a concert promoter, venue operator, and ticketing platform. The company also makes revenue from advertising and sponsorships. With offices in 45 nations, it promotes concerts all over the world. As of the end of 2023, the company claims to be the second-largest operator of music venues worldwide, owning, operating, and having exclusive booking rights to 373 venues. More than 50,000 events were promoted by Live Nation in 2023, bringing in over 145 million spectators. With over 620 million tickets sold by Ticketmaster as of 2023, it is a leading worldwide ticketing provider.
Being the largest live entertainment company in the world, LYV’s numerous business divisions cover almost every important facet of organizing live events. It has plenty of room to develop as younger folks continue to value live experiences, musicians are becoming more well-known internationally due to music streaming services, and touring artists are putting more emphasis on their work. Analysts believe the company is better positioned to take advantage of the potential than smaller rivals who don’t provide a broad range of services because of its vertical integration and global reach.
Significant growth was seen in several important criteria for Live Nation’s financial performance in 2023. Revenue grew to $22.7 billion, a 36% rise YoY. Over 145 million concertgoers attended over 50,000 events, accounting for 20% of this gain in attendance. The fact that fee-bearing gross transaction value (GTV) increased by 30% to around $36 billion added to the need for live music.
Vulcan Value Partners stated the following regarding Live Nation Entertainment, Inc. (NYSE:LYV) in its first quarter 2024 investor letter:
“Live Nation Entertainment, Inc. (NYSE:LYV) is the world’s largest live entertainment company. The live entertainment industry has grown in the high single-digits over the last two decades, and demand continues to exceed supply. Live Nation is a dominant player and offers a complimentary suite of services including concert promotion, venue operations, ticketing, and artist management businesses. Artists today make 90% of their revenue on tour as album sales and royalties become less important. Tours are increasingly global, and there are an increasing number of shows per tour. Live Nation’s comprehensive offerings and scale enable its concert promoters to make better decisions on pricing and venue organization which benefits artists, venues, and fans. We expect Live Nation to continue to grow in the high single-digits over our long-term time horizon.”
Ticketmaster’s dominance in the market and exorbitant prices have drawn criticism, which could provide regulatory issues for Live Nation. Nonetheless, live performances and venue services continue to support the company’s profitability, making it important to the music industry.
Parag Vora’s HG Vora Capital Management is the largest shareholder in the company, with 14,500,000 shares worth $280.65 million.
Overall LYV ranks 8th on our list of the best leisure stocks to buy now. While we acknowledge the potential of LYV as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LYV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This post was originally published on Insider Monkey.