Eventbrite Investors Settle With $1.9 Million Payout as Financial Plunge Continues

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Photo Credit: Eventbrite

Eventbrite investor’s legal team has negotiated a $1.9 million settlement with the ticketing company over false statements.

Investors sued Eventbrite last year over false or misleading statements ahead of its IPO in 2018. The lawsuit alleges Eventbrite was misleading about its acquisition of Ticketfly and how the platform would be integrated into Eventbrite.

Eventbrite’s stock price plunged sharply in March and May 2019 after updated revenue guidance. Investors launched a lawsuit after learning of the challenges Eventbrite was facing when integrating Ticketfly.

They claim the admission contradicted what Eventbrite communicated before its IPO. Eventbrite calls the investors’ claims baseless and sought to have the suit dismissed. Eventbrite also claims the investor’s lawsuit was too vague to be actionable.

On Friday, investors told a judge they had agreed to a settlement deal with Eventbrite. Investors said they’d rather get court approval for that settlement than continue a protracted legal battle against Eventbrite.

“Dimming prospects of any recovery, during litigation, the world was struck by the worst pandemic it suffered since 1918 – particularly bad news for a company whose business is helping customers plan their live events,” the investors told the judge in the case.

“With claims against Eventbrite dismissed in state and federal court, and the company’s future uncertain, the prospect that settlement class members would recover anything looked dim. Yet, lead counsel nonetheless were able to negotiate a $1.9 million settlement.”

The investor’s legal team argues that the settlement is less than they sought, but it’s not worth pursuing further. The onset of the pandemic has severely impacted Eventbrite’s business model.

Eventbrite shares rose 5% in after-hours trading on August 5 after beating Wall Street estimates for Q2 2020. Despite beating earnings, Eventbrite reported a sharp decline in revenue with a loss of $38.6 million, or 44 cents per share. That’s compared to a loss of $14.8 million, or just 18 cents per share in 2019. Revenue also plunged 90% to $8.4 million from $80.8 million just a year ago.

Eventbrite announced an expense reduction plan in April. The company says it remains on track to yield at least $100 million in annualized expense savings by the fourth quarter of this year. Analysts expected a loss of 50 cents per share on sales of $13.5 million.

Eventbrite shares are down 57% this year due to the spread of the coronavirus pandemic. It seems unlikely that live ticketing services will be recovering in 2020, as many 2021 shows are tentatively canceling January and February events. Investors were probably right to take the settlement they could get if Eventbrite doesn’t survive this pandemic.