Core Viewpoint - StubHub's stock has experienced a significant decline since its IPO, raising questions about potential investment opportunities following the sell-off [1][2]. Company Performance - StubHub went public on September 17 at $23.50 per share, but shares fell 38.7% in November due to disappointing first-quarter earnings and regulatory challenges in the UK [2][3]. - In the third quarter, StubHub reported an 8% revenue growth driven by an 11% increase in gross merchandise volume (GMV), although GMV growth adjusted for last year's Taylor Swift Eras tour would have been 24% [3][4]. - The company recorded a net loss of $1.3 billion on a GAAP basis, primarily due to one-time employee equity awards, but would have been profitable when adjusted [3][4]. - Adjusted EBITDA rose 21% to $67 million, indicating operational strength despite the net loss [3][4]. Market and Regulatory Environment - The UK regulatory body has initiated an antitrust probe into StubHub's international brand viagogo, which could impact the company's operations and the secondary ticket market [6]. - There are rumors that the UK may consider banning the resale of tickets above face value, which would significantly affect StubHub's business model [6]. Investment Considerations - Following the November sell-off, StubHub's market cap stands at $4.2 billion with an enterprise value of $5.3 billion, translating to an EV/EBITDA ratio of around 19 based on trailing 12-month EBITDA of $274 million [7]. - While the valuation is not considered cheap, it is reasonable for a capital-light company with double-digit growth potential, especially when adjusted for the impact of the Taylor Swift tour [7][8]. - StubHub is exploring new growth avenues, including direct ticketing, advertising, and international expansion, which may present future investment opportunities [8].
Why StubHub Plunged in November