Motley Fool Money - Instacart Is IPO Ready

Episode Date: August 28, 2023

Instacart is profitable and it’s growing, Is that enough to spark investor interest? (00:21) Jason Moser and Deidre Woollard discuss: - How Instacart makes its money. - What it means to be a grocery technology company. - If a strong Instacart IPO will be go sign for the market. (17:31)  Alicia Alfiere and Deidre Woollard break down how Live Nation profits from blockbuster tours. Companies discussed: LYV, DASH, UBER Host: Deidre Woollard Guests: Jason Moser, Alicia Alfiere Producer: Ricky Mulvey Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh, boy. Fantastic. You guys go hard. Daredevil Born Again, official podcast Tuesdays, and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. IPO, the market has been waiting for? Motley full money starts now. Welcome to Motley Full Money. I'm DeJollard here with Jason Moser, and today we're going to dive

into Instacart's IPO. Hey, Jason, how you doing? Hey, Dieter, it's fine. How about you? I'm good. So my first question for you is, are you an Instacart guy? You know, I have to admit, I am not. It's not that I am against Instacart or anything. I guess I am still just very much an in-person grocery shopper, and old habits die hard. I could see myself jumping into that Instacar world at some point, though. It sure looks really convenient. Well, I mean, that's kind of interesting because in their S-1, they said 12% of grocery shopping took place online last year.

And that's lower than other categories. So maybe there's a lot of people out there like you that are just not interested in doing this. Do you think that's true? Well, probably to an extent. I mean, you know, we've said it before. Changing consumer behavior is really difficult. And so this could be something that, you know, appeal. It probably does to an extent. I mean, I look at my kids, for example, in sort of the mobile

and convenience tools that they use. And this might be something that would more easily integrated into their daily lives as they get older, kind of raised with this being the norm, right? I mean, this is absolutely not the norm for most of us. We just didn't grow up this way, and you kind of get stuck in your behaviors. I do, I think, you know, one thing I've always said, Amazon really changed our value system, so to speak, right? And what I mean by that, convenience is far more a priority than it used to be because we have a choice, right? And so now it's not all about just the lowest prices. It's also about convenience.

We value our time differently, and so you'll be willing to pay for certain conveniences. And I think that, I mean, grocery shopping isn't the most exciting thing in the world. It can be a time suck. And if you're like me, I tend to go to the grocery store like every day or every other day. I don't stock up our kitchen with a week's worth of food. And that's just because I'm never really fully certain what I'm going to make for dinner. And then I also just, I'm not really a big fan of waste. And I don't want that food sitting in there for long periods of time.

But I think that this is something where this is a convenience that I think would resonate with consumers. But when you look in this S-1, management even noted this. They said in the S-1, this transformation will play out over decades. So I think that is encouraging to see that they're looking at it from that perspective, acknowledging the fact that, listen, at 12 percent, sure, there's going to be some growth opportunity there. But maybe this isn't necessarily the same as something like your electronics or whatever else that you might buy for Amazon, just for convenience sake.

I think the other thing is that people are just more comfortable these days doing things virtually. We grew up shopping in the grocery store, but people today, they grew up seeing things online and expecting them. So I think that's part of it. The other part of it, I think, is that people are just now more comfortable with having a stranger do stuff for them. Yeah.

So this is another of those double-sided marketplaces. So according to the S-1, you've got about 7.7 million people. They're ordering deliveries. You've got about 600,000 of the shoppers going to the stores and doing the picking. It seems a little bit to me, like a DoorDash. I guess there's some controversy over which is the better gig. But is this an issue of how they manage both sides of this marketplace going forward? Yeah.

I mean, the delivery side, when it comes to food, the delivery is a bit of a greater leap of faith, right? I mean, this isn't just pizzas we're talking about. In many cases, I mean, a lot of people like to go there and kind of just choose from the quality of the produce or whatever it may be. I don't know that this is a job where people enter this line of work thinking this is what they want to do for the rest of their lives, right? I mean, this is probably a job for most that is more of a means to an end. So loyalty is probably not a strength, unless they're paying for that loyalty, right? And it sounds like it's kind of going in the opposite direction.

It sounds like Instacart trying to whittle down that cost structure a little bit. And so that's understandable, right? If you're an employee, you know, you have two choices, and neither job is really, you know, what you love to do. I mean, if it's just kind of a means to an end, you're typically going to go to the higher-paying job. And so it does boil down, unfortunately, in many cases, just $2.00 and cents. I think you look at a company like this, I mean, there's not a high barrier for learning,

right? I mean, I think it's probably a job where you can jump in there and learn it pretty quickly. So even if employee turnover is high, you know, I don't think there are not a high, you know, necessarily prohibitive costs that come with that turnover, right? I mean, integrating new employees into that network, integrating new shoppers and that network is probably fairly easy. I kind of liken it maybe to Uber drivers or whatnot. I mean, you know, it's just, it's something where you're going to see some of that employee turnover, and that's just the nature of the gig. Maybe. I don't know, because the way I'm thinking about it is it's so easy to get it wrong.

And, like, there's been all these, like, memes with, like, you know, I asked by Instagram for a substitution for bananas, and they came up with peppers or something like that. So there is a little bit more, I think, of an art to it, maybe than DoorDash. I think that makes a lot of sense. I mean, there are some judgment that comes into play here. And there are going to be some people who are probably a little bit more thoughtful about what they're putting into these baskets for the shoppers, right? I mean, so, yeah, I absolutely can see that.

It is a job that does still require some thought and consideration. Because, again, you know, you're talking about groceries, and this isn't. You're not ordering a pizza. I mean, typically coming with a basket of 20, 30, or 40 different items, you kind of want what you want. And if it's a bad experience, if it's a consistently bad experience, if you're getting that order and it's not really the stuff that you want, well, then maybe you kind of say, well, there's a reason why I didn't do this online grocery shopping thing, and that's why, and I'm just going to go back to doing it in person. And then really, you may not ever get that consumer back. They may not ever really fully

trust that process, and so that could be lost business. Yeah, yeah, absolutely. Well, one of the other things I think is interesting about the S-1 is that, yes, the delivery part is a big part of the business, but another huge part of it is the ad platform. It's like 30% of the revenue, and we've seen this, the importance of the ads, so like we see it with like the streamers, like a Netflix or Disney Plus, but also with Amazon and Walmart, especially Walmart. Instagram has this big opportunity here.

They've got that captive audience. got the grocery brands. They say they've got over 5,500 brands. And so this is an important part of the business, but it's super cyclical. I mean, we've seen that recently with other companies getting hurt by that cyclicality. So how does that factor into how you think about Instacart? Well, I think it's a natural fit. I mean, I would be disappointed if they weren't pursuing the advertising opportunity, because it feels like a very natural fit for a business like this, particularly when you think about how many brands they have on that platform and the brand relationships they have with companies like Campbells and Nestle and Pepsi and whatnot. So to me, they can even

quantify it, right? In the S-1, they know that on average, their ads deliver more than a 15% incremental sales lift. And in some cases, they say even twice that for brand partners like Campbell's and Pepsi and whatnot. So to me, it's, again, I kind of think of a company, I go back to Uber, because I think this is very similar in that regard. Uber with a burgeoning ad business, And I think it's a very natural fit for that platform as they become more things than just, you know, a company that gets you from point A to point B, right? I think the key for Instacard in regard to that cyclicality, ultimately, is just making the business not so fully dependent on it. And I think we're seeing signs, again, that they are trying to do more than just grocery delivery and advertising, which is encouraging. Yeah, absolutely.

Absolutely. You mentioned Pepsi. Part of the story here. They're in line. They want to purchase 175 million of the Series A preferred stock. So clearly they believe in the business. Yeah. Well, I mean, they are a brand partner, and that means they likely have some anecdotal evidence to the value of the platform in taking an ownership stake in the business could certainly help in a number of ways for them to learn more about their customers, what customers want, product placement, product ideas, and whatnot. So it sounds like maybe they're taking advantage of a little bit of their institutional knowledge of this business, and that makes a lot of sense. Yeah, it feels like a positive sign to me. And so the interesting thing here is this company is going public. They're a little older. They're profitable. I mean, they may or may not stay that way.

But I think they have some advantages over some of the other IPOs recently, thinking about trying to compare them to DoorDash and that journey. Yeah. I mean, in regard to profitability, I mean, it is one of those things. It's nice to see that, you know, they are going public without having to sort of convince us of that path to profitability, right? I think that could be a big catalyst, right, for a company like this, particularly in a difficult time right now where, I mean, we've learned a lot over the last several years with many of these businesses going public that probably really shouldn't have gone public, or at least at the time, right? A little bit more time to sort of mature. It does look like in this case, I mean, Instacard is in a position where the business is well established, and they've painted a very good picture of the potential market opportunity. Now it's just a matter of execution and in capital allocation. Yeah, definitely. Well, I was thinking about this this weekend, looking through the S-1,

and thinking about whatever happened to P-Pod. Because I was in Wirtown, Massachusetts late-N-D-Pod, one of the earliest online startups. And they kind of made it through that delivery craze of the early office. when everything was being delivered, and then none of those businesses survived. Pee Pott survived, but Instacart came along and kind of took over. So is there anything that Instacart can learn from Pee Piedod? Well, the first thing that came to mind here, because Pee Pott at its time was extremely revolutionary. Oh, yeah.

But it was dealing with an environment that wasn't really as favorable to sort of the tech demands that really business like this requires, right? So I think they really started out with a great idea. It was maybe a little bit ahead of its time, just based on the tech capabilities that existed. And it kind of makes me think of these businesses that were older businesses that were built on more antiquated technology versus these cloud-first businesses that were built on cloud technology and therefore a bit more nimble and able really to iterate and grow more quickly. I think that's probably some of that here, at least with Instacart.

But yeah, again, it's a company that's taking advantage of technology. to ultimately become more than just a delivery company. They're using this platform ultimately to become what they consider a grocery technology company. So it's beyond just delivery. It's beyond just advertising. It's really helping brands figure out what their customers want. It's helping grocery stores in regard to analytics and whatnot. Potential opportunities there are really all over the place, thanks to the tech capability today.

Yeah, I noticed at the start of the S-1, they had the grocery technology company, and I'm like, I'm not sure, but then as they went through it, I'm sort of like, yeah, I guess so, because it really is, you know, with P-Pod, the problem was that they couldn't bring on the partners. They couldn't scale as fast as they wanted to. Instacart, the reason they were able to grow so fast is because they had the infrastructure so they could do that. Yeah, and if you think about P-Pod, I mean, the one thing I remember about P-Pod is the big trucks. Yes. Right? And, I mean, that's, I mean, we're just in a different place now where, I mean, you know, the actual getting through.

things from point A to point B, so to speak, you're not reliant on just these big trucks. I mean, we've got a much larger force of transportation out there that they can leverage, which I think makes a lot of sense. And our expectations are that we get things a lot faster. Yes, they are. World keeps speeding up. Well, you know, IPOs are tricky. They're so exciting, but I tend, I'm not, I'm a little risk-overished.

So I like to watch from the sidelines. I want to see what's happening with a company with Instagram. Mr. Card, the growth is good, but maybe slowing. And we talked a little bit about shopper, attrition, and that two-sided marketplace thing. Is there anything that you're watching for or you want to see within the first year? Yeah. I mean, I'm glad you mentioned the growth aspect there. I mean, clearly they benefited from the past three years, but as most businesses, you know, that was a lot of growth that was pulled forward, and that's now started to normalize a little bit. And when you

look at some of the data there, I mean, the orders, for example, For the six months ended last year to the six months ended this year, essentially flat, gross transaction volume, just up 4%. You've got to figure inflation probably played some kind of a role in that as well. So it does seem like things are slowing down here. I, like you, would rather kind of set on the sidelines and watch this thing for a little while. I don't feel a need to jump into IPOs, generally speaking, because we know that the enthusiasm

is high, particularly now. The market's really just hungry for a good IPO. And I think, you know, this is a business that has a lot of potential. And so I certainly understand all of the enthusiasm behind it. It's still a challenging time. I think you look at this business, while it's a relatively proven concept, and we know that management is taking that longer-term view as what they've said in the S-1, I'd like to follow leadership and sort of see that they're sticking to those guns, so to speak, right?

to see that they are continuing to take that long-term view and to make decisions that are in line with that long-term view. Because you could see a world where at some point or another, maybe the business is witnessing some challenges or the stock price is witnessing some challenges. And then you start to wonder, are they going to change their decision-making and do some short-term-focus things in order to accommodate for sort of that voting machine nature of the market and the near-term? So seeing management stick to that long-term playbook, I think, will be one thing. And then I think also just, you know, an interesting part of the business, the membership side of the business, right? You get the Instacart Plus product. I think that's a good metric to keep an eye on,

because as we know with companies like Uber and others, and these members really do account for more of the spending for businesses like these. It can be immensely profitable, particularly over time. So it would be nice to see them continue to grow that membership base as time goes on. Yeah, I'm thinking a lot about the members. membership bases that are in companies like an Uber and Uber Reets, because it's still sort of nascent, but it seems like there might be real potential. And I think that the thing to watch there is we're not going to have multiple

memberships to things the same way we might have multiple streamers. We're probably going to pick one. If I'm a consumer, I'm probably not going to have multiple of these, right? I think that's exactly right. It's either going to be Instacart or it's going to be something else. And ultimately, that's one of the advantages that Insicard has here. They've been able to scale so quickly, having that big of a lot of the network, it's going to give them a better chance at delivering on what they say they're

going to deliver on, right? And that, I think, ultimately, is what people want, is they want to know that they're going to be getting what they ordered, and they want to get it in a timely fashion, and it just can't be too expensive. Well, you mentioned that the market really wants to see a good IPO. I saw a figure over the weekend from Equities and quoted in New York Times, at least 1,400 private tech companies worth a billion. the unicorns. They're all just waiting on the sideline for the right moment to go public.

We've seen the CAVA IPO. Awesome. We've seen the better IPO. Not so awesome. We've got the arm IPO coming up to. Is this the moment? Is this when the floodgates open? What do you think? I tend to think not. I think the market, while clearly, you know, the appetite for good IPOs is there, you know, we've also learned a lot over these past few years. I mean, there's a lot of jobs. I mean, there's a lot of junk that went out there. You look at things like SPACs and how many companies were able to go public, just via the SPAC structure, for example. A lot of companies that really just shouldn't have gone public at that point. And we do know that with private valuations, they oftentimes aren't as efficient, perhaps, as the public valuations. And so while I think this is a good sign,

I look at those 1,400 or so companies with those billion-dollar plus valuations. And I think there's probably still a lot of junk in those as well. So we need to be careful. Yeah, totally agree. Well, thank you for your time today, Jason. Thank you. It was the summer of Taylor Swift, but what does that mean for Live Nation? I sat down with Alicia Alfieri to walk through the ins and outs of the company that concert goes may hate, but investors might love. I'm excited to talk to you because this has been the summer of live music and especially Taylor Swift and Beyonce. I mean, my goodness, the Ares Tour, it's not a concert. It's like a phenomenon.

It's lifting whole city economies. It gets news coverage when Taylor comes to town. This has been crazy. So it's been good news for Live Nation, which we're going to talk about today. It's sort of the companies I think everyone loves to hate. But it's good for them on one level, but it's drawn some attention to the fact that Live Nation and Ticketmaster, they kind of own us. So what's the background here? Swifties are a little upset sometimes because they can't get tickets.

What's going on? Yeah, so let's recap what happened. So back in November, Ticketmaster canceled the public ticket sale for Taylor Swift's era's tour. And again, lots of demand here. I think there was even a small earthquake in Seattle, yeah. Yeah. What happened here is that fans were seeing long wait times and other technical issues, trying to buy tickets for the pre-sale of the tour.

So it looks like, to me, the biggest culprit here was supply and demand. So Taylor Swift is pretty famous, which is what my eight-year-old nephew told me while we were singing along to one of her songs on Tuesday. And the thing is, he's not wrong. When you have someone or something that resonates with a lot of people, you have a ton of demand for that thing. And in this case, the demand was incredible. So 3.5 million fans signed up for the pre-sale, and only 1.5 million actually got a code to enter the sale while the rest were on a waiting list. usually only 40% of people who get a code will actually show up to buy a ticket. But for Taylor Swift, fans with a code, without a code, everybody logged in to buy tickets,

and Live Nation also reported a lot of bot attacks. And these factors cause delays and other tech issues. And during the presale, Ticketmaster sold more than 2 million tickets in a single day, which was a record. But fans were understandably frustrated. especially when they hopped on over to the secondary or resale ticket market and found tickets for, in some cases, thousands of dollars. So this drove many fans to air the frustrations on Twitter and to lawmakers, which put Live Nation on the radar for several people in Congress. Yeah, that's really interesting, too.

So let's talk about Congress. So one of the complaints, too, has been the extra fees. It's not even a Live Nation issue or ticketing issue. I mean, we see extra fees in like Airbnb and everything else. But Congress is looking at this. What's going on here? Yeah. So the act, I love the name of this act.

It's the Boss Swift Act for Taylor Swift is the Swift part. And Bruce Springsteen, of course, it's the boss. So this aims for transparency in ticket pricing with an all-in ticket price that's inclusive of fees and taxes. This is important because, according to the government accountability office, They found back in 2018 that extra fees were about 27% of the overall price. So that could be a pretty big surprise after you hit the purchase button for tickets. The legislation also seeks to provide consumers with information on refunds for tickets, as well as the number of tickets being sold, and whether these tickets are new or resold.

So I think transparency is usually a good thing, and here it seems like it's an improvement on the consumer experience or the user experience. So I don't really see this as a negative for Live Nation. But transparency is not the same thing as affordability. I think part of the issue here was Live Nation started using what they call a dynamic pricing model, which is they did this as an effort to help get artists more money of the ticket sales. So ticket buying isn't the only place where we have this dynamic pricing. You talked about Airbnb. be. That's definitely one of the companies that use this, also Uber and Surge pricing. So the model is

high demand, higher prices. And like economic principles of supply and demand, you're going to get, as people want more of this thing, the prices are going to go up. The only difference is you have this model that allows them to quickly inform and adjust the prices. Well, and with Taylor Swift tickets, there's no substitution. You can't get a lesser version of Taylor Swift. So there's really kind of know where to go. Exactly. Exactly. Well, and the other part of this is not just the fees.

That's the one side that the government is looking at. The other side of this is whether or not Live Nation with Ticketmaster is a monopoly, and if so, is it going to be broken up? Because part of the problem is here, you have Ticketmaster. They're selling the tickets. And then you've got Live Nation. They're promoting and they're operating venues. So if you're an investor in Live Nation, like, it seems like a really great business now,

but is this a big concern? It's a fair question. I think it depends on your thesis and who you are as an investor. So Live Nation is a top dog in a lot of the business that surrounds concerts. So it's estimated that they're the largest live entertainment company, the largest producer of live music concerts, and the largest live entertainment ticketing sales company. And that's a lot of largest, and we haven't even talked about the venues yet, right? If your thesis hinges on Live Nation being the biggest across many aspects of the concert space. I think it's easy to be afraid of the threat of the government potentially coming to split up the company. But I would say don't get too ahead of yourself here. First, it's an awful big if that we're talking about. A lot of things have to happen before we get to that point.

Also, remember, this is hardly the only company that's been called monopolistic and face threats of being broken up. And I think maybe the most important, if your fears are realized and the government's, splits up a company that you own, would that actually be a bad thing? So the answer is, as Jim Gillies would say, it depends, right? If you're a fan of Joel Greenblatt's, you can be a stock market genius, then you know that special situations like divestagers or perhaps even breaking up a company could be an opportunity for investors and for the companies, because it could potentially allow the business segments to be freed up to become the best versions of themselves,

potentially. But every situation is different, and it really depends. Yeah. I mean, there's a lot of things that could happen. You could have two separate companies with a spinoff. You could have someone else taking over. Of course, the government would probably get involved there, too. But there's a lot of options that could happen there. Yeah. And you know what? If, again, it also depends on who you are as an investor. If you're not a fan of Live Nation or companies that have really cornered a market, you might not be interested in holding a stock like this. And that's totally okay. It's your own individual journey.

Yeah, and I think one of the things that I find surprising about Life Nation, I study real estate. This is one of those stealth real estate companies, you know, kind of like McDonald's is a stealth real estate company. I love these. According to their last 10K, they own 172 venues in the U.S., 99 venues internationally. So if you're an investor, do you think of this as a real estate company to some extent? Well, they do have a pretty big footprint in the venue space, and some of these venues are pretty well known, too. like the Fillmore in San Francisco or the House of Blues venues. And for me, what's important here is this feeds into the idea of being everything concerts,

the ticketing, the promotion, and the owning of venues. And this creates a powerful flywheel effect for the business, which means that the success in one area of your business helps to fuel other areas. So more shows means more tickets sold, means more fans at shows, and more things being bought at these shows. and Live Nation likely makes more per fan at the venues that they own themselves. So it's all part of that flywheel equation. Yeah, the flywheel for me is fascinating because you're right.

It's not tickets. It's just tickets. There's sponsorships. There's advertising, which is bigger and bigger. They've also got some sneaky ancillary ways to make money beyond tickets. So there's a fast lane pass, sort of like with Disney where it gets you in, gets you in faster. Maybe you get other add-ons. There's meet and greets and little like fan.

add-ons, there's all sorts of things that you can sort of make money, especially when you've got something like a Taylor Swift or a Beyonce or, you know, anybody with a big fan base, it's, you know, gives them a little more money and gives Live Nation. It sounds like maybe a lot more money. So do you factor that in, too? Yeah. So this is another part of the flywheel, this ancillary spend. And it's, you know, it's so easy to focus on the ticketing aspect of Live Nation and forget

all about the opportunity when fans are actually at the concert. And there are a few ways to make money here like you talked about, right? You could sell concert goers' premium experiences and other upsells. And you could also sell advertisers access to those fans' attentions, right? They're a captive audience. But the growth here in these ancillary revenues really depends on the growth in concerts and events. Again, it's part of the flywheel, but it's one that requires balance because there isn't unlimited potential here, right? You wouldn't want to go to a concert where ads are ultimately detracting from your experience, right? Like, if there were commercials in between songs, that would be terrible.

That would not be good. Yes, so everything in balance, but it is definitely an interesting way for them to make money. Yeah, absolutely. Well, let's talk a little bit about CEO, Michael Rapino. So he's this kind of, you know, he's a promoter. He's definitely a promoter kind of guy. and he would like to be paid for it. He had a $139 million pay package that was voted down by shareholders,

partly because it didn't quite have the alignment with long-term performance. That was a non-binding vote. His pay is at discretion of the shareholders, but he is one of the most highly paid CEOs. I mean, he's doing a great job, but he's getting paid a lot. Yes, he is. And I think this is like a secret advertisement for looking at a proxy statement and also voting, if you are a shareholder. During the proxy elections, it is your way of telling the company how you feel about specific issues. So while the vote is non-binding, it's possible that the company will take notice of this.

Sometimes you don't even need a majority. Sometimes if you just have enough voters saying that they don't approve of this, it could kind of embarrass the company into redesigning a compensation package. And by the way, the ratio of Rapino's compensation to that of his median employee was over 5,000. to one. Big number. Yeah. But we should also note here, and I think you had mentioned it, that Rapino was the CEO throughout the company's struggles during the pandemic, and that he did take a pay cut during COVID. So he has done a good job. But I think the question here is really, can executive compensation impact your thesis? Can it break your thesis? And I think it's possible if something egregious is happening in compensation or with the company's

governance. I think in general, when you're analyzing the company, it's a good idea to look at what executive comp is based on. So Charlie Munger says, show me the incentives, and I'll show you the outcome. So according to Live Nation's proxy, 63% of Rapino's 2022 salary was based on performance, and one of the factors here is adjusted operated income. And always whenever something's adjusted, Oh, yeah. It means it excludes items, and some of those items are important. So the things that this excludes, it includes stock-based, or excludes, rather, stock-based comp, depreciation, amateurization, and other items.

And it's 63% isn't bad, and this adjusted operating income isn't bad, but it's not the most impressive way to incentivize executive performance either. I think as investors, we like to see a lot of management's compensation tied to performance that drives the business. And I think when someone's getting paid a lot, too, you always have to ask yourself, would it be the same company without that person in charge? Yeah, absolutely. And I am not sure it would be the same company without him in charge. So I don't love the high price here, but I do think he's worth it to some extent. Oh, yeah.

And again, he did see the company through that storm of COVID. Yeah. So that is massive. Well, let's talk about that storm of COVID because for a time we all thought, well, we're just going to go see concerts in the Metaverse. This is, we're just going to put on our Oculus Quest or whatever, Vision Pro, whatever's coming next. We're going to want to do that. But that didn't happen. Instead, everybody has rushed out and seen everybody this summer.

It's not just the, you know, it's not just the headliners. Everybody's going to festivals. Everybody's seeing everyone. Live music is back so much. And Rapino, you know, in the earnings call, you know, he said he doesn't see it slowing down through 2024. You know, I don't see it slowing down either based anecdotally on what I'm seeing from people in my life. But given that maybe we might see a recession, who knows at this point, maybe a little baby recession, how should we think about consumer behavior? Yeah.

Well, I would say with any investments, there's always risks, right? And a decrease in consumer spending or potential recession could potentially impact people's ability to afford those tickets, right? And we have seen a shift to consumer spending away from the things that we bought during the pandemic and toward experiences, right? And concerts are definitely an experience. But again, there is the risk that belt tightening will impact someone's ability to afford going to a concert. There could also be a concern that with all of the revenge experience spending that's happening after COVID, that consumers can burn themselves out and not as many people will be interested in concerts in a year or two. So far, that doesn't appear to be the case. So Live Nation says it has a strong pipeline of artist shows for the next year and that confirmed future shows are up relative to the same point last year.

And also, Statista, which provides market data and statistics, is forecasting a 5% compounded annual growth rate through 2027 for revenues for global music events. So we do think we're going to continue to have concerts. And also, don't forget, it's a truly unique experience. It's one of those things. There are very few things that you have to be there for the event to really get the true experience, right? It's live sports and live music.

So I think there's always going to be a special glow to concerts. Yeah, I think that's right. And the good news is this is not Taylor Swift's retirement tool. No. And she's going international. And international is a big part of Life Nation. So it seems like positive tail wins here. Yeah, absolutely.

Thanks for your time today, Alicia. Thanks. Glad to be there. As always, people on the program may have interest in the stocks they talk about. And the Motley Fool may have formal recommendations for or against. So don't buy ourselves stocks based solely on what you hear. I'm Deidre Willard. Thanks for listening.

We'll see you tomorrow.