How I Made $5000 in the Stock Market

Sorry, StubHub. Not Every IPO Can Be Hot.

Sep 12, 2025 14:22:00 -0400 by Andrew Bary | #IPOs #Feature

StubHub matches ticket holders and buyers, often at the last minute. (Dreamstime)

The ticket reseller is going public in a tough ticket reselling market with a high valuation. Investors should be cautious.

Key Points

About This Summary

Ticket-reseller StubHub can help you get that hard-to-come-by seat to the hottest show in town. Just don’t expect a “hot IPO” when the company goes public on Tuesday.

Since its founding in 2000, StubHub has changed the concert and sports ticket business by creating an online secondary market for live events that matches ticket holders and buyers, often at the last minute. Now it’s set to go public, with J.P. Morgan and Goldman Sachs serving as lead underwriters. If the 34 million shares the company is selling—about 10% of the float—are priced at the midpoint of the current range of $22 to $25 a share, StubHub would raise $800 million and be valued at around $8.6 billion.

While the IPO market has perked up this year amid investor enthusiasm for deals from the likes of CoreWeave , Circle Internet Group , and Figma, StubHub’s offering might not be greeted with the same enthusiasm. Conditions in the secondary ticket market have grown more competitive this year, StubHub’s profits are down relative to 2024, and the stock looks expensive. Despite StubHub’s dominance of the secondary ticket market, investors might want to avoid this show.

It has been a long road to a StubHub IPO. CEO Eric Baker, 52, founded the company in 2000 as a student at Stanford Business School after he and his girlfriend tried to get tickets for a sold-out performance of the Lion King on Broadway and were stymied by an opaque secondary market. He left the company before its sale to eBay in 2007, and then founded a European version of StubHub called viagogo, which bought StubHub from eBay for $4.1 billion in 2019. Baker owns a 10% stake and controls StubHub through supervoting stock.

StubHub bills itself as the “largest global secondary ticketing marketplace for live events” and its North American market share is believed to be close to 50%. Its international platform viagogo produces about 15% of its revenue, based on information in its IPO prospectus.

In a presentation on the website RetailRoadshow, Baker said he sees a “massive opportunity ahead. We want to create a destination where consumers can access any ticket for any event anywhere in the world.”

It’s clearly a large field. The North American ticket resale market totals about $18 billion annually, and the international market amounts to $23 billion, while the much larger market for primary ticket sales, which StubHub entered last year, reaches over $150 billion. StubHub is targeting a bigger piece of those pies.

The company generated $8.7 billion of ticket sales on its platform—what the company calls gross merchandise volume—in 2024, and $1.8 billion of revenue. StubHub’s fees average about 20% of the total price of the tickets that averaged about $200 last year.

Competition, however, is fierce in the secondary ticket market, particularly from market giant Ticketmaster, which is owned by the top concert operator Live Nation Entertainment . In a June report on Live Nation, Wolfe Research analyst Peter Supino noted that there’s little to keep new companies from entering the market or customers from switching to a competitor because of the commoditized nature of the ticket reselling business. “We view secondary ticketing as a fundamentally worse business than primary ticketing,” he wrote.

Other factors are also making the secondary ticket market tough. The Federal Trade Commission imposed new rules on the secondary ticketing business in May requiring total fees to be prominently displayed at purchase to avoid what the agency described as “bait and switch” tactics. Wolfe’s Supino highlighted another risk: anti-scalping initiatives by musical acts like the British group Oasis on its 2025 tour that invalidated any tickets sold at a premium on the secondary market. A final risk is that musical acts price tickets closer to fair value, creating less business for scalpers—and StubHub.

These factors, among others, have created tough conditions for ticket reselling in 2025. Vivid Seats, a smaller participant in the secondary market, called out “a challenging industry backdrop” in its second-quarter earnings release. It reported a 68% drop in Ebitda—earnings before interest, taxes, depreciation and amortization—to $14 million in the period. Its stock hit a new 52-week low of $15 this past week and is down over 80% this year. The company, which has about a third the revenue of StubHub, is valued at just $175 million.

Live Nation CFO Joe Berchold said at a recent industry conference that “this has not been a great secondary year on the sports side” and that some industry players are “focused on driving share in the secondary activity.”

In this tough environment, StubHub is holding its leading market position. Its gross merchandise sales were up 11% in the first half of 2025, to $4.4 billion, while revenue was up 3%, to $828 million.

On a GAAP basis, StubHub operated at close to break-even in the first half of 2025 excluding foreign exchange translation losses. Adjusted Ebitda, however, fell 26%, to $102 million, on what the company said was continued investment in its direct ticket sales business and “increased market spend” to accelerate market-share gains.

StubHub’s spending on the direct market makes strategic sense—the primary ticket business is more profitable than the secondary market. But Ticketmaster dominates the business. It has an estimated market share well above 50% to go along with a 25% share of the North American secondary market, making it the No. 2 player behind StubHub.

Against that backdrop, StubHub has set long-term financial targets of 20% annual gains in gross merchandise sales, with Ebitda margins of 35%-40%, compared with 12% in the first half. Those targets look optimistic given recent trends and Ticketmaster’s strengths.

Unfortunately, StubHub’s valuation leaves no room for error. Shares, at the midpoint of the pricing range, look rich at about 30 times 2024 earnings before interest, taxes, depreciation and amortization of $299 million. Live Nation Entertainment, the leader in live entertainment, trades for about 17 times trailing Ebitda.

StubHub is one ticket investors don’t need to buy.

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