While smart TV manufacturers have delivered incredible picture quality and a seemingly endless array of customizable options to sports fans everywhere, nothing beats the rabid atmosphere and high tension of watching a ballgame live. Indeed, certain stadiums and arenas represent bucket-list items in and of themselves, demonstrating that the live event market is still relevant.
Moreover, absence makes the heart grow fonder — and that’s no mere proverb. According to a USA Today report citing the Journal of Communications, “couples in long-distance relationships have more meaningful interactions than those who see each other on a daily basis.” Now juxtapose this concept toward the live events industry.
Over almost the past 2 years, people across the world had to delay their plans or cancel them outright due to the COVID-19 pandemic. Such a circumstance has only frustrated sports fans, most of whom were relegated to watching games on 2-dimensional screens during the worst of the crisis.
But now that new daily infections are subsiding, people are ready to reclaim their personal lives. As well, the money saved during the lockdowns bodes well for the initial public offering (IPO) of Vivid Seats, an online ticketing marketplace.
When is the Vivid Seats IPO Date?
One of the most intriguing public market debuts for its relevancy and cast of high-profile supporting parties, Vivid Seats will mark its debut on the IPO calendar on Oct. 19, 2021. Shares will trade on the Nasdaq exchange under the memorable ticker symbol SEAT.
Although Vivid has plenty of hype bolstering its upcoming IPO, the ticketing specialist will enter the public arena via a reverse merger with a special purpose acquisition company (SPAC). In April of this year, Horizon Acquisition Corp. (NYSE: HZAZ) announced that it will combine with Vivid.
For a quick refresher, a SPAC has no underlying operations of its own, hence its alternative label as a blank-check firm or shell company. Instead, its sole purpose is to launch an IPO in order to identify and merge with a viable private enterprise. Essentially, the SPAC and the target enterprise form a symbiotic relationship, with the latter providing the business and the former providing access to the public market.
To be sure, SPACs do not presently enjoy the most encouraging reputation. A key risk involved with SEAT stock or any merger with a blank-check firm is equity dilution. Typically, SPACs have 2 years to finalize a business combination. During this period, sponsors of these shell companies can distribute shares and warrants that might not contribute cash to the ultimate merger.
Not surprisingly, then, post-merger SPACs have underperformed benchmark indices on a year-to-date basis. However, you should assess SEAT stock on its own merits.
For instance, what makes Vivid Seating different from many other business combinations is its who’s who of investors. Horizon’s chief executive is Todd Boehly, a part owner of 3 Los Angeles-based franchises: the Dodgers, Lakers and Sparks.
Additionally, sports betting app DraftKings Inc. (NASDAQ: DKNG) made headlines recently when it announced it was acquiring shares of HZAZ. Not only does the move bode well for SEAT stock, it sets up the very real possibility for DraftKings to engineer marketing tie-ins with a major ticketing service. Thus, Vivid Seating could benefit from 2 symbiotic relationships off 1 central deal.
Vivid Seats Financial History
On Aug. 20, 2020, Horizon Acquisition Corp. announced the terms of its IPO, which involved the distribution of 50 million shares at a price of $10 per unit. Credit Suisse (NYSE: CS) provided lead bookrunning services while Deutsche Bank (NYSE: DB) and Royal Bank of Canada (NYSE: RY) supported bookrunning endeavors.
In April of this year when Horizon disclosed its merger intentions with Vivid Seats, the 2 entities estimated that their business combination will command a valuation of $1.95 billion, per a press release. Among the highlights for SEAT stock is that the underlying scaled marketplace supports “over 12 million customers and 3,400 sellers transacting across more than 200,000 listed events.”
Further, the corporate statement emphasized Vivid’s compelling “cash flow profile with minimal capital spending and favorable working capital dynamics.” Financially, this attribute will likely play an important role in the recovery effort as society gradually acclimates to the so-called new normal.
Indeed, acclimatization is the key concept when it comes to live events. For prospective buyers of SEAT stock, they must overcome the unsightly optics of last year’s performance tally and anticipate the future — not dissimilar to a fighter pilot leading cannon fire to where his or her aerial adversary will be.
For the full year 2020, marketplace gross order value (GOV) slipped to $347.3 million, down from $2.28 billion in 2019 or a staggering erosion of nearly 85%. Net loss expanded to $774.2 million from a loss of $53.8 million in 2019.
But due to the sharp crackdown on non-essential activities, such pain is to be expected. In Vivid’s second quarter of 2021 earnings report, the company revealed far improved numbers, generating marketplace GOV of $693 million in the period. In Q2 2020, the same metric was a loss of $63.3 million.
Moreover, in the half-year period ending June 30, the company posted marketplace GOV of $809.6 million, up 138% from the year-ago comparison. Additionally, net losses dropped significantly to $17.6 million, a favorable outcome versus the loss of $700.6 million in the prior year’s frame.
Vivid Seats Potential
Although SEAT stock is extraordinarily compelling given the return of full-capacity seating in sporting events across the nation, investors should be cognizant of the risk. Particularly, the Harvard T.H. Chan School of Public Health states that “in spite of overall declining COVID-19 cases and hospitalizations across the U.S., it’s tough to predict how the fall and winter will play out, given that there remain significant pockets of unvaccinated people.”
Since government agencies have incorrectly predicted the trajectory of this public health crisis before, it’s helpful to have a skeptical attitude. Nevertheless, too much skepticism can dissuade you from the real upside potential of SEAT stock.
Generally speaking, overt fear of the SARS-CoV-2 virus has subsided, with more people willing to crowd into tight spaces such as commercial airliners. Combining this sentiment with retail revenge — or the incentivization of consumers to spend aggressively this year to make up for lost time last year — more people (sports fans or not) will be willing to attend ball games and other live entertainment events.
Further, the labor force participation rate for millennials and Generation X is 81.6%, not horrifically off from the 83% peak of the Trump administration, reached in January 2020. Considering that pound-for-pound, this age bracket represents fiscally and physically the healthiest consumer demographic (keep in mind that older folks usually reduce their spending), SEAT stock navigates one of the most lucrative sea lanes.
How to Buy Vivid Seats IPO (SEAT) Stock
Because SPACs function like any other publicly traded security, you can jump on the Vivid Seats opportunity right now if you know how to buy stocks. If you don’t, just follow the steps below.
Step 1: Pick a brokerage.
Since most brokerages today offer near-identical incentives like commission-free trading, you should consider narrowing your list of best brokers to platforms that offer alternative investing vehicles, such as pre-IPO access or new issues at their initial offering price for select opportunities.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Beginnerssecurely through Robinhood's website
- Best For:Futures Tradingsecurely through TradeStation's website
- Best For:Experienced Traderssecurely through Freedom Finance's website
Step 2: Decide how many shares you want.
Because IPOs deal with the unknown, you shouldn’t bet the whole stack on public market debuts. Instead, choose a balanced share count to mitigate risk.
Step 3: Choose your order type.
Before placing your bet, familiarize yourself with these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers. Tighter spreads imply higher volume and therefore lower risk. Wider spreads indicate less demand and higher risk so the market maker will ask for more profitability.
- Limit order: Buy or sell requests at a specific price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the prevailing rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
SEAT Restrictions for Retail Investors
Before participating in an IPO, review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons to avoid possible legal troubles. In short, anyone with access to privileged information regarding a particular offering should avoid engaging in it.
Generally, traditional new offerings involve underwriters selling pre-IPO shares to their choicest clients, almost always institutional investors. Companies like ClickIPO, however, democratize this exclusive process by distributing new issues of select firms at their initial offering price.
The Best Seat in the House?
With the specter of the COVID-19 pandemic, traffic-dependent investments like SEAT stock are inherently risky. However, the vocal consumer appetite for normalized entertainment offerings may beat out pandemic-related concerns. If so, Vivid Seats presents an enticing opportunity.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.