Endeavor Group — The entertainment giant is forecasting a rebound in live entertainment
Live events are on a comeback — pending Delta variant — and one company is ready to take on event-hungry customers.
Endeavor (NYSE:EDR), the owner of UFC, reported earnings that failed to meet expectations but signaled the return of live events for the remainder of 2021 — sending its stock up 8%.
What’s the big deal? Endeavor is a heavyweight giant in Hollywood and the entertainment industry, owning and operating:
- Sporting and live events (i.e. UFC, EuroLeague, Miss Universe).
- WME — one of the largest talent agencies — representing The Rock and Serena Williams.
In April, Endeavor went public in an arguably overpriced IPO — and its stock stayed relatively flat since. But during its earnings call, its CEO gave reasons for investors to be optimistic, expecting:
- Bidding wars for its content to continue through the next decade as streaming and media services look to fill their platforms.
- Higher growth into 2022 with strength in its live music business and plans to ramp up its UFC business.
Clinching its foes: Endeavor is known for its acquisition strategy — completing more than 20 acquisitions since 2014 (notably buying UFC in 2016) which led to:
- 24% annual sales growth between 2016-2019.
- $5.4b in debt — a massive debt load that made it pay out nearly $270m in interest expenses in 2019 (6% of sales).
Endeavor is still largely unprofitable and it’ll need to turn its acquisitions into profitable ventures — to prevent investors from kimura-ing its stock down.
Looking forward: Endeavor expects 2021 sales of $4.8-4.85b — a 5% increase from its 2019 pre-COVID levels. Not a significant growth but above its 2020 COVID days.
The wildcard to Endeavor’s recovery: COVID Delta variant.