Kustom Entertainment (KUST) AI Stock Analysis

• Market Cap: $2.07M
• Dividend Yield: N/A
• Average Volume (3M): 47.86K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.83
• Revenue Growth: -9.62%
• EPS Growth: 95.79%
• Country: US
• Employees: 31
• Sector: Communication Services
• Sector Strength: 97
• Industry: Advertising Agencies
• EPS (TTM): -1.77
• Shares Outstanding: 801,006
• 10 Day Avg. Volume: 99,163
• 30 Day Avg. Volume: 47,863
• PEG Ratio: 14.30
• Price to Book (P/B): -1.43K
• Price to Sales (P/S): 569.92
• P/FCF Ratio: -2.12K
• Enterprise Value/Market Cap: 6.39
• Enterprise Value/Revenue: 0.69
• Enterprise Value/Gross Profit: 3.06
• Enterprise Value/Ebitda: -2.95
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 42 Neutral
• Price Target: $2.50 ▲(204.88% Upside)

The score is primarily held back by weak financial performance, led by persistent losses and heavy negative free cash flow despite improving loss trends and a more stable current balance sheet. Technicals add further caution with the stock below key longer-term moving averages and negative MACD, while valuation offers little support given a non-meaningful (negative) P/E and no dividend yield.

Positive Factors

Narrowing Losses

The company materially reduced annual losses versus prior year, showing traction in cost control or revenue mix improvements. This contraction of losses, if sustained, lowers dilution risk, extends runway per dollar raised, and indicates movement toward scalable profitability.

Improved Balance Sheet Stability

Return to positive equity and moderate leverage provide greater financial flexibility versus the prior year’s negative equity. A more stable capital structure reduces insolvency risk, supports access to financing if needed, and gives management room to invest in strategic growth initiatives.

Strategic Refocus on Live Entertainment

Exiting healthcare and refocusing on live events and a proprietary ticketing platform aligns resources to a single market opportunity. Concentration on Country Stampede and ticketing targets a large global live events market, potentially enabling clearer go-to-market, product investment, and revenue model clarity.

Negative Factors

Persistent Cash Burn

Sustained negative operating and free cash flow at this magnitude requires external funding or asset sales to maintain operations. Continued cash burn constrains strategic investment, increases refinancing risk, and can force dilutive capital raises or asset divestitures that weaken long-term competitive position.

Deep Negative Profitability

A net margin near -45% despite positive gross margin indicates high fixed costs or inefficient operating structure. Persistent deep losses hinder self-funded growth, reduce resilience to demand shocks, and require structural margin improvements to achieve sustainable, long-term earnings generation.

Declining Revenue Trend / Limited Scale

Negative revenue growth suggests weakening market traction or execution at current scale. Combined with a small employee base and modest revenue, limited scale reduces bargaining power, constrains investment in product/ticketing platform development, and makes fixed-cost absorption and margin recovery harder.

Kustom Entertainment Business Overview & Revenue Model

Company Description

Digital Ally, Inc. produces and sells digital video imaging, storage, and disinfectant and related safety products for use in law enforcement, security, and commercial applications in the United States. It operates through three segments: Video Solutions, Revenue Cycle Management, and Entertainment. The company offers in-car digital video mirror systems for law enforcement; in-car digital video event recorder systems for commercial fleets and fleet managers; a suite of data management web-based tools to assist fleet managers in the organization, archiving, and management of videos and telematics information; commercial line of digital video products that serve as event recorders; body-worn digital video systems for law enforcement and private security; and VuLink ecosystem that provides intuitive auto-activation functionality, as well as coordination between multiple recording devices. It also provides EVO Web, a web-based software that enables police departments and security agencies to manage digital video evidence quickly and easily; FleetVu and VuLink, which are cloud-based evidence management systems; ThermoVu, a non-contact temperature-screening instrument that measures temperature through the wrist and controls entry to facilities when temperature measurements exceed pre-determined parameters; and Shield disinfectants and cleansers for applications against viruses and bacteria. In addition, the company offers working capital and back-office services, including insurance and benefit verification, medical treatment documentation and coding, and collections to healthcare organizations; and operates TicketSmarter.com, an online ticketing marketplace for ticket sales, partnerships, and ticket resale services for live events, including concerts, sporting events, theatres, and performing arts. It serves online visitors; and medium to large healthcare organizations. Digital Ally, Inc. was founded in 2004 and is headquartered in Overland Park, Kansas.

How the Company Makes Money

Digital Ally generates revenue through the sale of its hardware products, including body-worn cameras and in-car video systems, which are often sold to law enforcement agencies. Additionally, the company offers subscription-based services for data storage and management through its software solutions, creating a recurring revenue stream. Key partnerships with law enforcement agencies and government contracts are significant contributors to its earnings, allowing the company to secure long-term sales and service agreements. Furthermore, Digital Ally may benefit from ongoing maintenance and support contracts related to its products, enhancing its overall revenue potential.

Kustom Entertainment Financial Statement Overview

Summary

Despite narrowing losses versus 2024 and a healthier TTM leverage/equity position, profitability is still deeply negative (net margin ~-45%) and cash burn remains heavy with TTM operating and free cash flow around -$10M. The history of balance-sheet instability (including prior negative equity) and ongoing negative FCF materially weaken the fundamentals.

Income Statement

TTM (Trailing-Twelve-Months) revenue is modestly higher, but profitability remains weak: gross margin is ~23% while operating and net margins are deeply negative (net margin ~-45%). Losses have improved meaningfully versus 2024 (net loss narrowed from ~-$19.8M to ~-$8.7M and operating losses also reduced), but the company is still not generating positive earnings power, and recent annual periods show large, persistent losses.

Balance Sheet

Leverage is moderate in TTM (Trailing-Twelve-Months) with debt at ~0.47x equity, and equity is positive (~$8.6M), supporting a more stable capital position than the prior year. However, the balance sheet has been volatile: 2024 shows negative equity (a major risk signal) and returns to shareholders are currently very weak (TTM return on equity is sharply negative), indicating losses are still eroding capital despite the improved leverage profile.

Cash Flow

Cash generation is a key concern: TTM (Trailing-Twelve-Months) operating cash flow is about -$10.0M and free cash flow is about -$10.4M, worse than 2024’s outflows. While losses have narrowed, cash burn remains heavy and consistent across years, suggesting the business is still relying on external funding or balance sheet resources to sustain operations.

Breakdown
Income Statement
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Gross Profit
EBITDA
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Balance Sheet
Total Assets
Cash, Cash Equivalents and Short-Term Investments
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Kustom Entertainment Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 0.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KUST, the sentiment is Neutral. The current price of 0.82 is below the 20-day moving average (MA) of 2.58, below the 50-day MA of 3.66, and below the 200-day MA of 33.31, indicating a neutral trend. The MACD of -0.40 indicates Negative momentum. The RSI at 49.45 is Neutral, neither overbought nor oversold. The STOCH value of 86.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KUST.

Kustom Entertainment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
SPCB	54 Neutral	$35.19M	22.61	―	―	―	―
VRME	51 Neutral	$12.82M	-2.70	-44.14%	―	-14.21%	-20.44%
BKYI	47 Neutral	$6.55M	-0.59	-143.60%	―	-1.19%	86.72%
GFAI	44 Neutral	$14.29M	-1.50	-21.54%	―	4.38%	74.69%
KUST	42 Neutral	$2.07M	>-0.01	-233.66%	―	-9.62%	95.79%

Kustom Entertainment Corporate Events

Kustom Entertainment Exits Healthcare to Sharpen Entertainment Focus

On January 8, 2026, Kustom Entertainment’s wholly owned subsidiary Digital Ally Healthcare, Inc. sold its 51% ownership stake in Nobility Healthcare, LLC, a healthcare billing and revenue-cycle management business, to the existing 49% minority owner for total consideration of about $1.45 million, consisting of $100,000 in cash at closing, $209,501 in debt and working capital-related credits, and a $1,140,499 promissory note bearing 6% interest. The divestiture, announced in a January 12, 2026 press release, follows the company’s recent rebranding and Nasdaq ticker change and marks a decisive exit from healthcare services as Kustom Entertainment streamlines around its live entertainment and online ticketing operations, positioning its Country Stampede festival and proprietary ticketing platform as the core growth drivers in a roughly $100 billion global live events market and signaling to investors a shift toward a more focused, entertainment-centric business model.

The most recent analyst rating on (KUST) stock is a Hold with a $0.84 price target. To see the full list of analyst forecasts on Kustom Entertainment stock, see the KUST Stock Forecast page.