Vivid Seats' (SEAT) growth and margin profile are set to be affected by an uncertain consumer spending environment and rising peer competition within the secondary ticketing market, BofA Securities said in a note Thursday.

The analysts said they noticed a change in management's outlook for live events in 2025, as the industry has experienced negative trends over the last six weeks, compared to initial expectations of double-digit growth. While some of this is due to tough comparisons in Q1, management also mentioned potential consumer weakness in Las Vegas, which raises concerns about growth in H2. The analysts added that Vivid Seats may need to increase marketing spending, which could reduce its profit margins, as competition is expected to remain high in 2025.

The analysts said the company's guidance also reflects increased competition, with management providing a wider gross order value range than usual, and the midpoint of earnings before interest, taxes, depreciation, and amortization implying a margin contraction. Management expects to make "additional investments in marketing and technology" to protect Vivid Seats' market position and boost volumes. However, it also pointed out that marketing expenses have historically been "uneconomic," a trend expected to continue in 2025.

"The consumer spending environment remains cloudy, and competition within the secondary ticketing market is elevated with peers focused on driving volumes," the analysts said, adding they expect these issues to weigh on the company's growth and margin profile.

BofA Securities downgraded Vivid Seats to underperform from buy and cut its price target to $2.60 from $6.25.

Price: 2.80, Change: -0.11, Percent Change: -3.62