icon
icon
icon
icon
Upgrade
icon

Vivid Seats Inc.'s (NASDAQ:SEAT) Intrinsic Value Is Potentially 70% Above Its Share Price

AInvestWednesday, Jan 1, 2025 2:01 pm ET
4min read


Vivid Seats Inc. (NASDAQ:SEAT), a leading online ticket marketplace, has seen its share price underperform the broader market in recent months. As of early 2025, the company's stock is trading at around $4.63, significantly lower than its estimated intrinsic value of $6.62, indicating a potential opportunity for investors. This article will explore the factors contributing to Vivid Seats' intrinsic value and discuss the reasons behind the discrepancy between the intrinsic value and the current share price.

Vivid Seats' Competitive Advantages and Growth Prospects
Vivid Seats' competitive advantages lie in its technology platform, which connects buyers with ticket sellers, and its proprietary enterprise resource planning tool, Skybox. These advantages contribute to its intrinsic value in several ways:

1. Marketplace GOV and Revenue Growth: Vivid Seats' platform has consistently shown growth in Marketplace Gross Order Value (GOV) and revenues. In the third quarter of 2024, despite a decline in Marketplace GOV, revenues held roughly flat year-over-year, demonstrating the platform's ability to maintain revenue growth even in the face of market headwinds.
2. Strong Unit Economics: Vivid Seats has maintained strong unit economics, as evidenced by its ability to grow Adjusted EBITDA even as Marketplace GOV and revenues remained relatively flat in the third quarter of 2024. This indicates that the company's platform is efficient and profitable on a per-unit basis.
3. Disciplined Execution and Synergies: Vivid Seats has demonstrated disciplined execution and the ability to generate synergies through acquisitions, such as the Vegas.com acquisition. This has helped the company maintain strong financial performance even in the face of temporary headwinds.
4. Innovative Pricing Functionality: The company's Skybox Drive tool has exited its beta phase and is already onboarding users, with hundreds more on the waitlist. This innovative pricing functionality is expected to further enforce the stickiness of Skybox and fortify Vivid Seats' leading position with professional sellers.

These competitive advantages, along with the company's strong financial performance and growth prospects, contribute to its intrinsic value. According to a DCF valuation model, the estimated intrinsic value of Vivid Seats (SEAT) is $6.62 USD, with an upside of 42.90% based on the current market price of $4.63 USD.

Strategic Partnerships and Acquisitions
Vivid Seats' strategic partnerships and acquisitions play a significant role in enhancing its intrinsic value by expanding its customer base, increasing its inventory of tickets, and improving its technology platform. The company's acquisition of Vegas.com in 2023 allowed it to cross-list inventory and convert Vegas.com customers to Vivid Seats customers, contributing to its strong financial performance. Additionally, the development of Skybox Drive, an innovative pricing functionality, has further strengthened Vivid Seats' position in the ticket resale market.

Financial Performance and Growth Prospects
Vivid Seats' financial performance and growth prospects significantly influence its intrinsic value. The company's revenue growth, profitability, and cash flow generation are key factors in determining its intrinsic value. Vivid Seats has shown consistent revenue growth over the years, with a revenue of $712.88 million in 2023, an increase of 18.76% compared to the previous year's $600.27 million. Additionally, the company's profitability has improved over time, with a net income of $74.54 million in 2023, a significant increase from the previous year's $28.66 million. Strong cash flow generation, with an operating cash flow of $39.07 million in 2023, further supports Vivid Seats' intrinsic value.

Valuation Multiples
Vivid Seats' valuation multiples suggest that the company is undervalued compared to its intrinsic value estimate of $6.62 per share. The company's P/S ratio of 0.76, P/E ratio of 27.27 (trailing) and 37.19 (forward), P/OCF ratio of 24.62, and EV/EBITDA ratio of 12.36 are all lower than the industry averages, indicating that Vivid Seats' stock price is relatively low compared to its sales, earnings, and cash flow. This further supports the notion that Vivid Seats may be undervalued.

Conclusion
Vivid Seats Inc.'s (NASDAQ:SEAT) intrinsic value is estimated to be $6.62 USD, with an upside of 42.90% based on the current market price of $4.63 USD. The company's competitive advantages, strategic partnerships and acquisitions, financial performance, and growth prospects all contribute to its intrinsic value. Despite the current share price being significantly lower than the estimated intrinsic value, investors should be cautious and conduct thorough research before making any investment decisions. The information provided in this article should serve as a supplement to your required research, and it is essential to apply independent thinking when evaluating investment opportunities.


Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.