StubHub’s IPO Plans Amid Market Recovery
As anticipated, the online ticket resale platform StubHub has filed for an initial public offering (IPO) in New York, aiming to capitalize on the resurgence in live entertainment following the pandemic.
The company has not yet specified the size of its IPO. Earlier this month, The New York Times reported that during an investor meeting, StubHub plans to raise over $1 billion from its public listing.
Financial Performance and Challenges
Last year, The Information reported that people close to the company indicated StubHub is targeting an IPO valuation of $16.5 billion.
In its SEC filings presented on Friday (March 21), the company disclosed a significant 29.5% increase in revenue for 2024, attributed to a rise in gross merchandise sales from ticket transactions.
StubHub’s revenues for 2024 are projected to reach $1.77 billion, up from $1.37 billion in 2023, marking an impressive growth of 70.8% compared to 2022, where revenues were $1.04 billion.
Despite revenue growth, StubHub reported a net loss of $2.8 million in 2024, transitioning from a net profit of $405.2 million in 2023, with total expenses rising to $1.63 billion from $1.11 billion the previous year. In 2022, the company had already faced a net loss of $261 million.
Founded in 2000 by CEO Eric Baker, StubHub claims to operate the “world’s largest marketplace for event tickets.” The platform connects buyers with ticket sellers across various sports events, concerts, and theatrical performances.
“We envision a future where content rights holders can sell tickets directly on our marketplace, utilizing our distribution and data to maximize attendance.”
Eric Baker, StubHub
“Our business model has achieved high-growth scale and generated substantial income, profit, and cash flow. We connect fans worldwide with sellers who leverage our marketplace to engage passionate fans and facilitate ticket sales. We operate our global ticket marketplace through two brands: StubHub in North America and Viagogo internationally,” the IPO statement indicated.
StubHub plans to allocate IPO proceeds to reduce outstanding debts and for general corporate purposes. As of December 31, 2024, StubHub had $2.85 billion in outstanding debt, with interest rates ranging from 9.11% for US dollar loans in 2024 to 7.86% for its term debt in 2024.
The presentation also revealed that StubHub recorded $93.9 million in potential legal and regulatory expenses for 2024, compared to $48.2 million in 2023, with the company stating that these proceedings are “part of its regular operations.”
In May 2024, the jury in a US State Court awarded $16.4 million against StubHub for breach of contract and “interference claims.” The sports ticket company TicketManager alleged that StubHub failed to make payments for purchases sent to them, potentially damaging TicketManager’s relationship with American Express. StubHub recognized this amount as a liability on its balance sheet.
StubHub also faced scrutiny over its pricing practices. In Van vs. StubHub, a case filed in California in 2018 alleged misleading customers with pricing structures that did not include mandatory taxes and fees upfront. The issue, referred to as “drip pricing”, was claimed to have been resolved in the fourth quarter of 2022, incurring $3.1 million in legal fees, $1.5 million in cash, and $20 million in anticipated future sales losses.
More recently, in February 2024, the company received a court summons from the Attorney General of the Colombia District regarding allegations that certain website functionalities, including comprehensive pricing, violate consumer protection laws.
Despite these challenges, StubHub asserts its market position remains robust, with buyers from over 200 countries and territories purchasing 40 million tickets from more than 1 million sellers on their platform in 2024.
StubHub also plans to utilize part of the IPO proceeds for acquisitions or investments in businesses, products, offerings, and technologies.
“We see a significant opportunity to leverage our data and technology to create a comprehensive platform for all event-related content. We anticipate a future where content rights holders will sell tickets directly on our marketplace, using our distribution and data to maximize attendance,” Baker added.
The IPO of StubHub positions it against Vivid Seats, which has reportedly been considering a sale. This company became public through a merger with Horizon Acquisition Corp. in 2021 via a Special Purpose Acquisition Company (SPAC).
As of Friday, Vivid Seats’ stock price dropped 6.6% from the previous session to $2.81. The stock has fallen 35.7% in the past month and 37.8% year-to-date, with several analysts recently lowering their price targets for Vivid Seats. Morgan Stanley reduced its target price for the company to $3.75 from $4.60, while Bank of America reiterated its “underperform” rating.
StubHub files for IPO in New York, reveals 30% revenue growth in 2024
