No Party For SFX

The electronic dance music promoter, which had priced its IPO at $13 per share, at one point dipped as low as $10.64 in afternoon trading, eventually closing 8.5 percent down at $11.89.

Paul Sweeney, an analyst for Bloomberg Industries, told Bloomberg News the decline came as a bit of a shock.

“The decline in the stock price is surprising given that the underwriters and company priced at the high end of the range,” he said.

SFX has been gobbling up EDM promoters and related companies in the past year including dance promoter ID&T, which runs the Tomorrowland festival, electronic download store Beatport and a string of Miami nightclubs, though the purchases have yet to turn a profit, according to the company’s IPO filing.

Documents show SFX had losses of $44.6 million on revenues of $37.5 million for the first six months of 2013.

The company has said it plans to use proceeds from the IPO to help fund additional acquisitions, noting potential deals with companies including Electric Zoo producer Made Event, i-Motion GmbH Events, which produces Germany’s Nature One festival, and Australia’s Totem Onelove Group that promote’s the country’s Stereosonic.

But will amassing an army of EDM holdings in order to compete with Live Nation, which entered a “creative partnership” with Electric Daisy Festival promoter Insomniac earlier this year, prove a safe financial bet?

EDM has faced a slew of negative publicity this summer surrounding drug overdoses at concerts and festivals including Electric Zoo, where two fans died.

Sillerman dismissed the negative press to the New York Times and said the deaths had not scared off sponsors.

He added that the recent TommorowWorld festival drew 140,000 fans without major incident.