LiveOne, Inc. (LVO) shares took a tumble on Tuesday following the announcement of an amended partnership with electric vehicle giant Tesla, Inc. (TSLA). While LiveOne renewed its partnership with Tesla, extending it through May 2026, the deal comes with some significant changes.
Effective immediately, Tesla has replaced its streaming button with LiveOne’s permanently. This means that Tesla owners will now have access to LiveOne’s music streaming service directly through their vehicles. In addition, LiveOne unveiled its LiveOne 2.0 platform, which will allow subscribers to access music across all their devices. Approximately 1.9 million existing LiveOne subscribers have the potential to upgrade to the Premium/Plus services.
However, the partnership isn’t all sunshine and roses. Starting December 1, 2024, Tesla will cease subsidizing LiveOne products for some of its customers. Despite this, LiveOne will offer all Tesla owners discounted music packages.
LiveOne CEO Robert Ellin expressed optimism about the changes, stating, “The conversion opportunity has enormous upside by offering Tesla owners an opportunity to upgrade and have access on all devices at discounted priority pricing.” He also highlighted that Tesla will continue to pay LiveOne monthly for existing users indefinitely.
Looking ahead, LiveOne is confident that the changes will ultimately drive growth. Ellin remarked, “We’ll drive growth, unlock new revenue streams, own our data, and increase ARPU (Average Revenue Per User).” However, the company has adjusted its fiscal year 2025 revenue guidance to reflect the timing of the conversion rate. The new estimate is $120 million to $135 million, compared to the previous forecast of $140 million to $155 million. Adjusted EBITDA is projected at $8 million to $15 million, down from the previous range of $16 million to $20 million.
Despite the revised outlook, LiveOne has reaffirmed its $12 million share buyback program and has already retired 4.2 million shares, bringing the total number of outstanding shares to approximately 94 million.
The market reacted negatively to the news, with LVO shares closing down by 21.4% at $0.7460 on Tuesday. Investors are likely weighing the potential long-term benefits of the partnership against the immediate impact on revenue projections.
