Digital And Mobile Ticketing Will Expand Global Markets

Key Takeaways

• Accelerated international expansion and advanced technology investments position Vivid Seats for outsized revenue, margin, and market share gains as digital adoption grows.
  
• Structural cost efficiencies and strong financial flexibility support aggressive share gains, opportunistic M&A, and potential EPS upside as end market demand strengthens.
  
• Regulatory pressures, rising customer acquisition costs, shifting industry models, weak product differentiation, and unstable live event demand threaten Vivid Seats' long-term revenue stability and competitiveness.

Catalysts

Operates an online ticket marketplace in the United States, Canada, and Japan.

• Analysts broadly agree that international expansion will drive modest growth and incremental margin, but actual results in early European markets have already exceeded break-even, showing net contribution positive performance and proving that more rapid and profitable scaling across additional countries could substantially accelerate both revenue and margin growth in the medium term.
  
• Analyst consensus calls for efficiency improvements from loyalty and cost controls, yet the cost reduction initiative-combined with the rapid rollout of AI-driven analytics and automation-could enable materially higher operating leverage, allowing Vivid Seats to win share aggressively while structurally compressing G&A and marketing spend as a percent of revenue, driving significant upward re-rating of EBITDA and net margin expectations.
  
• Vivid Seats' investments in proprietary technology, including its highly adopted SkyBox ERP and next-phase seller tools, position the company to capture the large-scale shift to digital and mobile ticketing, boosting customer retention, growing average order sizes, and lifting conversion, which can directly expand both revenue and gross profit over time.
  
• The continuing trend of younger generations demanding more frequent, unique live events-coupled with global urbanization and rising disposable incomes-means latent end-market growth remains underappreciated, especially for agile tech-centric platforms like Vivid Seats, unlocking upside in GOV, revenue, and order frequency as macro conditions normalize.
  
• The company's strong balance sheet, growing cash flow, and demonstrated willingness to opportunistically repurchase shares at steep discounts to intrinsic value could turbocharge earnings per share and enable selective M&A, accelerating both top-line growth and margin expansion ahead of industry consolidation.

Vivid Seats Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Vivid Seats compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Vivid Seats's revenue will grow by 3.8% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Vivid Seats will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Vivid Seats's profit margin will increase from -20.3% to the average US Entertainment industry of 8.6% in 3 years.
• If Vivid Seats's profit margin were to converge on the industry average, you could expect earnings to reach $66.6 million (and earnings per share of $7.4) by about August 2028, up from $-141.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 11.9x on those 2028 earnings, up from -0.8x today. This future PE is lower than the current PE for the US Entertainment industry at 28.8x.
• Analysts expect the number of shares outstanding to decline by 1.85% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Vivid Seats Future Earnings Per Share Growth

Risks

• Regulatory actions such as the FTC's all-in pricing mandate and potential crackdowns on junk fees have already contributed to double-digit declines in industry volumes and are likely to compress Vivid Seats' take rate and profit margins as fee flexibility is reduced.
  
• Aggressive marketing competition, particularly in performance marketing channels like paid search, is driving up customer acquisition costs, putting continued pressure on net margins and eroding overall profitability as competitors are willing to spend uneconomically to capture top-line growth.
  
• Secular industry shifts towards direct-to-consumer ticketing, exclusive partnerships between event organizers and primary platforms, and growing adoption of blockchain or alternate ticketing methods threaten to reduce the relevance and transaction volume of secondary exchanges like Vivid Seats, resulting in persistent revenue headwinds.
  
• Diminished differentiation in product or technology, as well as shuttering of side ventures like Vivid Picks due to poor engagement and regulatory complexity, highlight ongoing risks to user retention and challenge Vivid Seats' ability to achieve long-term revenue growth and a sustainable competitive moat.
  
• The volatility and softness in live event demand-exacerbated by changing consumption patterns such as increasing preference for virtual or streaming events, as well as ongoing fluctuations from sports and concert calendar outcomes-increase the risk of unstable earnings and limit visibility into durable, long-term revenue growth.

Valuation

• The assumed bullish price target for Vivid Seats is $62.33, which represents two standard deviations above the consensus price target of $32.89. This valuation is based on what can be assumed as the expectations of Vivid Seats's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $20.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $775.5 million, earnings will come to $66.6 million, and it would be trading on a PE ratio of 11.9x, assuming you use a discount rate of 12.3%.
  
• Given the current share price of $17.93, the bullish analyst price target of $62.33 is 71.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.