South by Southwest (SXSW) is an annual music, film and interactive festival that takes place in Austin, Texas. The conference draws big-ticket names — from the tech and media industry to features film premieres to artist performances. Each year, thousands of people from across the world attend for the concerts, workshops and interviews. In fact, it’s practically the event of the year for tech companies — firms like Twitter (NYSE:TWTR) and Foursquare even got their start there.
In the wake of Covid-19, though, the highly anticipated festival found itself in a tough position. Major sponsors began to pull out over safety concerns. Then, after much debate, SXSW announced that the event would not be taking place in 2020. Overnight, restaurants, bars and rentals in Austin saw their most profitable week of the year vanish. After all, SXSW draws crowds from across the globe and is a major economic driver for the city.
Now in 2021, the pandemic is still a threat to large gatherings, forcing SXSW to host its event online this year. While this is good news for companies that are able to be a part of the festival in the digital format, there are still some businesses that are likely to lose out on revenue.
So, here’s a look at three stocks that will be impacted by the loss of the live SXSW gathering.
Stocks That Are Missing In-Person SXSW: Airbnb (ABNB)
When you think of events of any kind, the first name that comes to mind is Airbnb. That’s because the online rental marketplace is a go-to resource for anyone looking for a temporary accommodation.
As I mentioned earlier, SXSW draws in crowds from across the world. Needless to say, many of these people typically opt for Airbnbs over hotels during the festival. The flexibility that Airbnb offers is ideal for mass events like this one.
However, with SXSW going online this year, the company is undoubtedly losing out on a major source of revenue in the Austin area. This year’s event will feature networking sessions, music performances and interviews completely online. So, with attendees watching the festival from their own homes this year, the hospitality industry — and ABNB stock — will definitely be mourning the loss of a live South by Southwest this year.
Another major sector that is definitely going to be impacted by the loss of live events is ride-sharing. Very often, event hosts partner up with ride-sharing companies like Lyft or Uber (NYSE:UBER) to get attendees to book rides to and from their hotels or rentals.
These app users usually receive a discount when booking a ride. SXSW draws in fans from across the world, making the event a major source of revenue for firms like Lyft. The shift to a digital medium will mean a big chunk of lost income for the company.
In the era of online-concert streaming and limited-capacity bars and restaurants, ride-sharing services are seeing a significant decrease in usage. The last 12 months have been tough for the industry, no doubt, but the incoming return to “normal” hints at a potential reversal of fortunes. However, experts also believe that the digital trend that was born out of necessity could soon itself be the norm. Either way, LYFT stock is certainly feeling the pain from the pandemic.
Finally, Austin-based Yeti manufactures premium coolers and accessories — also known as the essentials for any live event. Like with Airbnb and Lyft, a digital SXSW this year will mean lost sales from event hosts who would have purchased the company’s coolers to keep their drinks cool in the heat of Texas.
However, it’s not just cooler sales that are going to be impacted this year. In 2019, Yeti hosted a series of summer parties at the festival which featured a number of performances as well as food from local eateries. These small businesses will also not be able to get that same revenue and exposure at the new SXSW digital event.
Moreover, hosting an event at SXSW is major advertising for any company. Typically, event attendees are able to check out Yeti’s latest products and even pick up a cooler while they’re there. An online SXSW takes this away, however. Looking at the bigger picture, these means lost revenues for the company as well as all the local food vendors it hosts.
On the date of publication, Divya Premkumar held a long position in ABNB stock. She did not hold (either directly or indirectly) any positions in the other securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for Investor Place since 2020.