StubHub’s IPO Woes Show a Hot Market Doesn’t Guarantee Success

StubHub signage during the company’s initial public offering at the New York Stock Exchange earlier this week. (Michael Nagle/Bloomberg)

Beware the IPO hype.

The weak reception for StubHub’s $800 million initial public offering underscores that investors need to be cautious about the frothy IPO market.

While the IPOs have revived in recent months, it remains a market of individual companies and investors evaluate them on their merits and won’t bid them up simply because they are a new issue.

StubHub shares are down 5.3% to $20.84 Thursday, after falling 6% Wednesday on its initial day of trading. The IPO was priced late Tuesday at $23.50, the midpoint of the anticipated offering range. The company, which sold 34 million shares in the IPO, is now valued at $7.6 billion

And for all the excitement about IPOs, postdeal price performance isn’t all great. Gemini Space Station, the crypto company, is trading at $24.50, down 12% from its IPO price of $28 last week. Fintech Klarna Group, the largest recent IPO at $1.3 billion, has given up a chunk of its post-IPO pop and it now trades at $45, up 11% from its IPO price.

One thing investors need to recognize is that seemingly every deal is reported to be oversubscribed before pricing. This is part of the IPO hype that emanates from deal underwriters. The StubHub deal was a case in point with Bloomberg reporting it to be oversubscribed.

That can be a sign of strong demand, but the way the IPO game works is that many institutional investors seek allocations of IPO because they think the deals will be hot, not because they intend to be long-term holders of the stock. When stocks don’t pop, these “flippers” often head for the exit.

That may have been the case Wednesday and Thursday with StubHub. Volume was heavy at 40 million shares Wednesday—more than the IPO deal size of 34 million shares. And volume is 14 million shares Thursday.

Even the poorly received McGraw Hill IPO in July that priced below the targeted range was said to be oversubscribed, according to Bloomberg.

Investors also need to do their homework. There were some warning signs in the StubHub IPO prospectus and elsewhere that Barron’s highlighted last week in a skeptical article on the ticket reselling leader with an estimated North American market share of around 50%.

The ticket reselling business is competitive thanks to the presence of Live Nation Entertainment’s Ticketmaster unit, the leader in primary ticket sales, and others, including the publicly traded Seat Geek. Conditions this year have been tough particularly with sports tickets.

StubHub also had a high valuation at around 30 times its 2024 Ebitda of $299 million (earnings before interest, taxes, depreciation and amortization), a premium to Live Nation at about 17 times. And StubHub’s first-half 2025 Ebitda was down 26% to $102 million relative to the year-earlier period. The company operated at loss in the first half of 2025 on a GAAP basis.

Reflecting difficult market conditions, the stock of Seat Geek, a smaller ticket reseller with about a third of StubHub’s ticket sales volume, is down 80% this year to around $17. The company is valued at $175 million, a tiny fraction of StubHub.

Another risk for ticket resellers like StubHub is that artists and concert promoters price tickets closer to fair market value, cutting into the opportunity for professional sellers. The pros, or scalpers, account for an estimated 80% of ticket supply, according to a report on StubHub from LightShed Partners analyst Brandon Ross.

There also are efforts to limit the ability of bots and professional sellers to gain access to so many primary tickets.

The bull case on StubHub is that it is the leader domestically and internationally in the secondary ticketing market and that it will benefit from a move into the primary market.

StubHub co-founder and CEO Eric Baker said in an interview with Barron’s Wednesday that the end of Taylor Swift’s popular Eras tour at the end of 2024 had a negative impact on growth in the first half of this year. Backing out the Swift impact, the company’s gross merchandise sales, the dollar value of tickets, actually rose 20% from a year ago. The gain was around 11% including the Swift impact. “The vision is for StubHub to be the destination for all live events,” Baker said.

Investors, however, see a business that now is generating modest profits in a competitive field with regulatory risks that has a high valuation.

Write to Andrew Bary at andrew.bary@barrons.com