Eventbrite, Inc. (NYSE:EB) Stocks Pounded By 33% But Not Lagging Industry On Growth Or Pricing

The Eventbrite, Inc. (NYSE:EB) share price has fared very poorly over the last month, falling by a substantial 33%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 34% share price drop.

Even after such a large drop in price, given close to half the companies operating in the United States' Entertainment industry have price-to-sales ratios (or "P/S") below 1.3x, you may still consider Eventbrite as a stock to potentially avoid with its 1.8x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.

View our latest analysis for Eventbrite

How Has Eventbrite Performed Recently?

Eventbrite certainly has been doing a good job lately as it's been growing revenue more than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

Keen to find out how analysts think Eventbrite's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Eventbrite's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as high as Eventbrite's is when the company's growth is on track to outshine the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 25%. Pleasingly, revenue has also lifted 208% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 13% per year as estimated by the six analysts watching the company. Meanwhile, the rest of the industry is forecast to only expand by 9.8% per year, which is noticeably less attractive.

With this in mind, it's not hard to understand why Eventbrite's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Final Word

Eventbrite's P/S remain high even after its stock plunged. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Our look into Eventbrite shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

Before you take the next step, you should know about the 3 warning signs for Eventbrite that we have uncovered.

If you're unsure about the strength of Eventbrite's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.