After rolling up $260 million in their initial public offering, SFX Entertainment had a down first day of trading on the NASDAQ, dipping by as much as 16%, before recovering to closing the day at $11.89, down 8.54%. Launched a year ago by Robert F.X. Sillerman, the company has been on a buying spree in the electronic music world as Sillerman worked to repeat his rollup of the concert industry in the 1990s.
Earlier this year, Sillerman boasted earlier this year of plans to invest more than a billion dollars in EDM companies and promoters. Since then, the company has invested in, or plans to invest in ID&T, the Dutch promoter who produce the successful Tomorrowland Festival which just this summer and who just imported their festival brand to the U.S. SFX has also invested in promoter Made Event, the company behind New York's Electric Zoo festival, as well as online electronic music distributor Beatport.
Despite Sillerman's bankroll, he has competition this time around, particularly from major players in the live entertainment market such as Live Nation, who has also been working to bolster their EDM portfolio with acquisitions of promoters such as Hard and Insomniac, the company behind the Electric Daisy festivals.
Other potential weights on SFX's stock price include concerns by some analysts that the current EDM craze in the U.S., is a fad, a possibility that SFX acknowledged in their prospectus.
"While interest in electronic music has increased significantly over the past few years, this increase in interest may not continue, and it is possible that the public will not sustain its current level of interest in electronic music. If either were to happen, the demand for, and interest in EMC festivals, events and venues and our online properties could fail to meet our expectations or even decline. This would have a material adverse effect on our business and financial results," the company reported in a filing with the SEC. - via CelebrityAccess