Kustom Entertainment (KUST) AI Stock Analysis

• Market Cap: $1.08M
• Dividend Yield: N/A
• Average Volume (3M): 47.86K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.79
• 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: 632,812
• 10 Day Avg. Volume: 99,163
• 30 Day Avg. Volume: 47,863
• PEG Ratio: 4.77
• Price to Book (P/B): -477.68
• Price to Sales (P/S): 189.97
• P/FCF Ratio: -707.09
• Enterprise Value/Market Cap: 12.93
• Enterprise Value/Revenue: 0.73
• Enterprise Value/Gross Profit: 3.23
• Enterprise Value/Ebitda: -3.12
• 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: 44 Neutral
• Price Target: $1.50 ▲(82.93% Upside)

The score is weighed down primarily by weak financial fundamentals—ongoing losses and heavy cash burn—alongside a technically weak price trend. Offsetting factors include a more stable recent leverage profile and positive corporate actions to streamline the business via divestitures and a clearer strategic focus, though execution and profitability risks remain high.

Positive Factors

Strategic Refocus on Live Events

The planned divestiture of the video unit signals a deliberate move to concentrate resources on live event production and a proprietary ticketing platform. Narrowing scope can improve operational focus, allocate capital to higher-growth units, and simplify go-to-market execution over the medium term.

Exit Non-Core Healthcare Business

Disposing of the healthcare subsidiary removes a non-core, capital-consuming line and clarifies strategy around entertainment. This reduces managerial complexity, modestly improves near-term liquidity via sale consideration, and better aligns corporate resources with the core Country Stampede and ticketing growth thesis.

Improved Capital Position vs Prior Year

Positive equity and moderate leverage provide a firmer financial base than prior periods of negative equity. A healthier balance sheet increases resilience to shocks, enables more predictable access to capital markets or partners, and supports investment in the focused live-events strategy over coming quarters.

Negative Factors

Heavy Cash Burn

Sustained negative operating and free cash flow indicates the business consumes significant cash to run operations and scale, forcing reliance on external financing or asset sales. This materially shortens runway for executing the entertainment pivot without further capital or cost reductions.

Deep Losses and Weak Margins

Low gross margins combined with steep operating and net losses constrain the company's ability to self-fund growth or absorb investments in marketing and production. Until margins meaningfully improve, profitability remains uncertain and strategic initiatives may be undercapitalized.

Divestiture Execution & Liquidity Risk

Relying on a non-binding sale that pays little cash and mainly preferred stock creates uncertainty for near-term liquidity and the success of the strategic pivot. If the transaction fails or the stock consideration lacks convertibility or market value, the firm may still face acute funding and execution gaps.

Kustom Entertainment Business Overview & Revenue Model

Company Description

Kustom Entertainment, Inc. engages in the design, manufacture, and sale of digital audio, video recording, and speed detection devices. It operates through the following segments: Video Solutions, Revenue Cycle Management, and Entertainment. The Video Solutions segment includes video recording products and services for law enforcement and commercial customers and the sale of Shield disinfectant and personal protective products. The Revenue Cycle Management Segment consists of medical billing subsidiaries. The Entertainment segment focuses on ticketing services provided through TicketSmarter and its online platform, TicketSmarter.com. The company was founded on December 13, 2000 and is headquartered in Overland Park, KS.

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

Losses are narrowing versus 2024, but profitability remains very weak (deeply negative operating and net margins) and cash burn is heavy with negative operating and free cash flow. Balance sheet leverage looks moderate in the latest period with positive equity, but the recent history of negative equity and sharply negative ROE remains a material risk.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	19.10M	19.65M	28.25M	37.01M	21.41M	10.51M
Gross Profit	4.33M	5.49M	5.76M	2.32M	5.66M	4.06M
EBITDA	-4.49M	-15.88M	-20.11M	-16.66M	26.38M	-2.00M
Net Income	-8.66M	-19.84M	-25.69M	-19.28M	25.47M	-2.63M
Balance Sheet
Total Assets	25.08M	27.74M	47.03M	56.67M	82.99M	20.80M
Cash, Cash Equivalents and Short-Term Investments	793.36K	454.31K	680.55K	3.53M	32.01M	4.36M
Total Debt	4.04M	8.66M	9.92M	1.78M	2.18M	996.76K
Total Liabilities	17.56M	36.75M	35.58M	20.33M	27.13M	6.44M
Stockholders Equity	8.60M	-7.82M	10.78M	35.89M	55.81M	14.36M
Cash Flow
Free Cash Flow	-10.39M	-5.28M	-10.13M	-20.77M	-25.44M	-13.97M
Operating Cash Flow	-10.03M	-5.11M	-9.89M	-18.58M	-17.83M	-13.27M
Investing Cash Flow	-354.29K	387.55K	-240.71K	-2.94M	-19.12M	-1.50M
Financing Cash Flow	10.76M	4.40M	7.38M	-6.95M	64.60M	18.78M

Kustom Entertainment Technical Analysis

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

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KUST, the sentiment is Negative. The current price of 0.82 is below the 20-day moving average (MA) of 2.20, below the 50-day MA of 2.85, and below the 200-day MA of 18.76, indicating a bearish trend. The MACD of -0.24 indicates Negative momentum. The RSI at 36.91 is Neutral, neither overbought nor oversold. The STOCH value of 6.58 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	$42.26M	27.16	―	―	―	―
VRME	54 Neutral	$14.31M	-3.01	-44.14%	―	-14.21%	-20.44%
BKYI	48 Neutral	$7.86M	-0.71	-143.60%	―	-1.19%	86.72%
KUST	44 Neutral	$1.08M	>-0.01	-233.66%	―	-9.62%	95.79%
GFAI	44 Neutral	$11.35M	-1.19	-21.54%	―	4.38%	74.69%

Kustom Entertainment Corporate Events

Kustom Entertainment sets 2026 executive compensation and options

Effective January 22, 2026, Kustom Entertainment, Inc.’s Compensation Committee approved 2026 compensation packages for its top executives, setting annual base salaries at $200,000 for President and CEO Stanton E. Ross and COO Peng Han, and $90,000 for CFO, Treasurer and Secretary Thomas J. Heckman, along with eligibility for performance-based cash bonuses of up to $250,000 each. The Committee also granted stock options under the company’s 2022 equity plan to these executives and to members of the Board of Directors at an exercise price of $2.04 per share, equal to the Nasdaq closing price on January 22, 2026, with all options cliff-vesting on January 22, 2027, contingent on continued service, a move that further aligns leadership and director incentives with shareholder value and long-term company performance.

The most recent analyst rating on (KUST) stock is a Hold with a $2.50 price target. To see the full list of analyst forecasts on Kustom Entertainment stock, see the KUST Stock Forecast page.

Kustom Entertainment to Divest Video Unit, Refocus on Live Events

On January 22, 2026, Kustom Entertainment, Inc. announced that it had entered into a non-binding Memorandum of Understanding with Cycurion, Inc. to divest its video solutions division in a transaction expected to be valued between $6.0 million and $8.5 million, comprising $1.0 million to $1.4 million in cash and the remainder in Cycurion preferred stock, subject to customary closing conditions and final negotiations. The contemplated sale marks a significant step in Kustom’s strategy to streamline operations and concentrate on its rapidly growing live event production and proprietary online ticketing businesses, leveraging the long-running Country Stampede Music Festival as a blueprint to expand its national footprint in the estimated $100 billion global live entertainment and ticketing market and potentially reshaping the company’s operational focus and growth prospects for investors and partners.

The most recent analyst rating on (KUST) stock is a Hold with a $2.00 price target. To see the full list of analyst forecasts on Kustom Entertainment stock, see the KUST Stock Forecast page.

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.