Last Friday (March 31st), Live Nation (LYV) CEO Michael Rapino added another $1 million in company stock to his personal portfolio. Anytime an insider trade like this occurs, people assume it’s for one of two reasons:
- They know something we don’t and are seeking to capitalize on an upcoming announcement, deal, or another outcome.
- They are attempting to restore confidence in shareholders, the board of directors, and perhaps the rest of the market after a period of lackluster performance.
In looking at the last year of stock performance for Live Nation (down nearly 40%), there’s reason to believe it’s the latter. According to the SEC filing, though, this move was nothing more than an attempt to maintain his strong level of stock ownership in the company.
However, some believe that this specific insider trade was made as part of a tax withholding effort. The intricacies of the move are complex, as it was technically listed as a “sale” rather than an “acquisition”. The end result, regardless, was that Rapino pulled $1 million from his bank account to increase the number of shares he had in LYV.
This isn’t the first time he has made a $1 million trade in the company he’s worked to build since 2005, either. Just a few years back in 2020, he made a similar move that proved effective – as his last $1 million position earned an $800,000 return as of today.
Live Nation is on track to follow up last year’s record-setting revenue with another great year in 2023. Some of the world’s biggest artists are touring – Drake, Beyoncé, and Madonna to name a few. So – what is holding this stock back?
There are fears in regard to the heavy debt burden weighing down Live Nation. Prior to the pandemic, the company held $3.7 billion in debt. Today, that figure has nearly doubled. Moreover, the company is still being scrutinized by regulators over its merger with Ticketmaster in 2010 – and more recently, the Taylor Swift ticket debacle.
Nevertheless, you’re wondering if you should follow or fade Rapino’s move. And below, we’ll highlight 3 key takeaways we’ve uncovered through the VectorVest stock forecasting software. You’re not going to want to miss this breakdown if you’re currently invested in LYV or considering adding it to your portfolio.
Poor Timing Aside, LYV Has Very Good Upside Potential and Fair Safety
The VectorVest system simplifies your trading strategy by giving you all the information you need to make confident, calculated decisions through three ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Interpreting these ratings is quick and easy as each one sits on its own scale of 0.00-2.00, with 1.00 being the average. By picking stocks with rising ratings above the average, you’re set up to win more trades.
But it gets even easier - as VectorVest gives you a clear buy, sell, or hold recommendation for any given stock, at any given time based on these ratings. As for LYV, here’s the current situation:
- Very Good Upside Potential: As it currently stands, LYV has a very good RV rating of 1.27. This is a comparison of the stock’s 3-year price projection in comparison to AAA corporate bond rates and risk.
- Fair Safety: In terms of risk, LYV is fairly safe - as evidenced by the RS rating of 1.01. This is derived by analyzing the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
- Poor Timing: The one thing holding LYV back right now is the negative price trend we’ve seen grip this stock for some time. The RT rating of 0.82 is calculated based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year.
In averaging these three ratings, the overall VST rating of 1.03 is fair - slightly above the average. Is it enough to earn this stock a buy, though? Or should you fade Rapino’s latest move? Get a clear answer on your next move through a free stock analysis at VectorVest today.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for LYV, it has very good upside potential and fair safety, but it’s being held back by poor timing.
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