If businesses have learned anything, it’s that you never want to anger pop superstar Taylor Swift. Given her practically unparalleled influence, her words seemingly carry the weight of law. Certainly, U.S. lawmakers paid attention when Swift criticized Ticketmaster – under the Live Nation Entertainment (LYV) umbrella – for its struggles managing ticket distribution for her Eras Tour.
As a primary market provider, Ticketmaster enjoyed the enviable honor of selling Eras tickets for the first time – and of course at the face value set by the event provider. Naturally, legions of Swift fans (colloquially referred to as Swifties) waited for hours in online queues, only for their patience to go for naught as technical issues temporarily collapsed the Ticketmaster website.
Following the disaster, the face-value tickets were gone and holding a large chunk of the inventory were secondary market providers like Vivid Seats (SEAT). Pejoratively known as scalpers, ticket resellers may operate a lucrative business if they focus on high-profile events such as Taylor Swift concerts. In the modern era, professional resellers deploy smart bots and other technologies to acquire large volumes of primary market ticket distributions.
Of course, such a cynical practice sparked collective anger toward SEAT stock and its ilk, leading to a Congressional hearing against Ticketmaster. It’s a complicated matter but the crux of the criticism centers on Ticketmaster’s alleged monopoly of the live event industry and how said monopoly enables bad actors to ruin the fan experience.
Despite the obvious public relations cloud over SEAT stock, the underlying enterprise offers a viable upside opportunity for investors. Better yet, it appears the smart money may be anticipating a sizable move northbound.
SEAT Stock Brings Out the Bulls
To get an edge in the market, investors often consider unusual stock options volume to determine which publicly traded enterprises received an extraordinary uplift in volume compared to usual levels. While this indicator isn’t foolproof, it does provide some idea about what the smart money anticipates.
For SEAT stock specifically, total volume in the derivatives market following the close of the July 17 session reached 3,425 contracts against an open interest reading of 3,172. Further, the delta between the Monday session volume and the trailing one-month average metric came out to 773.72%.
Drilling down, call volume hit 3,405 contracts while put volume landed at 20 contracts. This pairing yielded a put/call volume ratio of 0.01, substantially favoring the bulls. Interestingly, Barchart also points out that the put/call open interest ratio for SEAT stock clocked in at 0.27, which also implies strongly bullish sentiment.
Regarding options flow data, the framework is a bit more contested. Nevertheless, in the last major transaction, traders bought call options for SEAT stock on June 21 of this year, which represents a classic bullish setup. Interestingly, implied volatility for SEAT options is also picking up, which suggests expectations for greater options price movement in the future.
It’s also worth mentioning that overall, analysts remain optimistic about SEAT stock. Presently, experts peg shares as a consensus moderate buy, breaking down as four strong buys, one moderate buy and three holds. Significantly, no one has issued a sell rating yet.
Taken as a whole, Vivid Seats offers an intriguing opportunity because contrary to public sentiment, scalping is arguably the most meritocratic means to gain entry to high-profile events.
Vivid Seats is All About Who Wants It More
Because of Taylor Swift’s massive global appeal, not all Swifties will be able to acquire tickets in the primary market. Sure, you can wait in line and go through the hassles. But as the Ticketmaster fiasco in France recently demonstrated, enduring the inconveniences and hardships can yield you zero tickets. In other words, you would have been better off using your time much more productively.
And that’s basically what Vivid Seats and its peers offer: the ability to gain entry to high-profile events without jumping through hoops. In other words, it comes down to the question of, who wants it more?
A personal story might be helpful. I’m not exactly a Swiftie. However, I love baseball and have been following the career of Los Angeles Angels’ phenom Shohei Ohtani. So, when the Angels came to town to take on my San Diego Padres, the tickets to those games commanded a hefty premium.
Now, I could have attempted to buy the tickets from the primary market (i.e. directly from the ticket office) but of course, both seating availability and stadium location were limited. Therefore, the only option I had was to go to the secondary market, of which Vivid Seats was one option (I attended two games).
Sure, I knew I would pay a premium because – guess what? – it’s Shohei Ohtani, the modern-day Babe Ruth, only better (no hate mail, please!). And while it’s easy to demonize ticket scalpers, they also gave me an opportunity to watch the game live.
Therefore, it’s the most sensible, meritocratic avenue possible, in my opinion. I wanted to see the “Sho” and I was willing to pay extra for the privilege. It’s capitalism at its purest.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
