Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
On paper, investors should be lining up for front-row tickets to StubHub’s initial public offering. The live entertainment industry just came off two blockbuster years thanks to the jumpsuit-clad efforts of Taylor Swift and Beyoncé.
StubHub, as the dominant platform for ticket resale in North America, has benefited handsomely from fans’ frenzied rush to get within screaming distance of their favourite stars. It sold more than 40mn tickets last year and delivered a 29 per cent jump in revenue to $1.7bn.
But like the ticket touts who hawk their wares on its site, StubHub itself is charging a high price for admission. Its valuation target of $16.5bn works out to more than nine times trailing revenue. Rival ticket reseller Vivid Seats — down 76 per cent since its making its public debut in 2021 — is on a paltry 0.5 times while Live Nation, owner of ticketing giant Ticketmaster, trades on 1.2 times. StubHub’s hoped-for enterprise value would be about 60 times adjusted ebitda, an eye-popping premium to the 18 times that Live Nation commands and Vivid’s 10 times.
Justifying a tech-like investment means generating a lot of growth. StubHub thinks it can deliver that by going after the primary issuance market — which Live Nation at present dominates — and other adjacent markets such as digital advertising and sports betting. Those segments already offer brisk competition, and rely on consumer spending staying robust.
Despite keeping about 20 per cent of each dollar in ticket sales it facilitates, StubHub ended 2024 with a net loss of $2.8mn. That is partly because of high interest costs resulting from net debt of about $1.3bn — or 4.5 times its 2024 adjusted ebitda. Some of the proceeds from the listing will be used to pay down borrowings, although the company has not detailed what kind of leverage will result.
Then there is the expense of fighting heightened competition from the likes of SeatGeek, Vivid Seats and Gametime. Ticketmaster, the largest player in primary ticketing, also moved into the secondary business. StubHub’s costs jumped nearly 50 per cent last year to $1.6bn. More than half of this was spent on sales and marketing. Echoing a common IPO riff, co-founder and chief executive Eric Baker will retain control via super-voting shares.
Swift’s “The Eras Tour” is now over, and the mood music for ticket sellers has changed. On-off and on again trade wars and mass government lay-offs may make consumers less willing to splash out on pricey concert tickets. At the same time, secondary ticketing has drawn increasing scrutiny from state and federal regulators and legislators. StubHub has its fans, but at the mooted valuation, its IPO is no golden ticket.
