Following a significant hiatus, the market for initial public offerings (IPOs) appears to be gaining momentum once more. Despite ongoing tariff uncertainties affecting the short-term outlook, several private companies are moving forward with plans to enter the public market.
One notable company preparing for its IPO is StubHub, which recently submitted an S-1 registration form and intends to list its shares on the New York Stock Exchange under the ticker symbol STUB. As the leading secondary ticket marketplace, StubHub presents an attractive opportunity for investors, featuring a narrative that includes a founder’s return to a company from which he was previously dismissed, consistent annual growth of 30% over the past two years, and emerging growth prospects under development by the management team. However, the valuation remains a point of consideration.
Eric Baker, a Stanford MBA student, co-founded StubHub in 2000 with the aim of creating the premier online marketplace for live event tickets, spanning sports, concerts, and theater productions. Traditionally, secondary market tickets were acquired through scalpers or brokers, methods often marred by fraud and high markups. StubHub successfully branded itself and gained recognition, but Baker’s disagreement over strategic direction with his co-founder, who held a larger stake, led to his ouster in 2004.
Subsequent to his departure, Baker founded a European competitor, viagogo, in 2006, as StubHub had not yet entered the European market. StubHub was acquired by eBay in 2007 for $310 million. While Baker profited from the sale, he felt the company had been sold prematurely. This belief was validated when viagogo purchased StubHub back from eBay for $4.05 billion in 2019, with the company now aiming for a higher valuation in its upcoming public market debut.
The acquisition was finalized in February 2020, undergoing a lengthy regulatory review in the U.K. that coincided with the challenges of the COVID-19 pandemic. During this period, StubHub implemented layoffs and altered its cancellation policies, opting to provide customers with credits instead of refunds. Although controversial, these measures helped the company navigate the pandemic. Settling with regulators and the Federal Trade Commission followed in May 2021, coinciding with the reopening of live events post-vaccine rollout.
U.K. regulatory approval for the merger was granted in September 2021, necessitating the sale of StubHub’s international business and allowing viagogo to complete integration in September 2022.
Financially, StubHub reports significant growth post-merger, with revenue increasing by 31.9% in 2023 and 29.5% in 2024, although overall profitability is hindered primarily by debt interest. Operating profits and free cash flow remain positive.
Further strengthening its position, StubHub benefits from its business model, which receives upfront payments for tickets while remitting seller payments later. This results in a favorable working capital situation, enhancing cash flow. The company plans to allocate IPO proceeds toward reducing its $2.39 billion debt, which bears significant interest, thereby decreasing financial risk and boosting profitability.
Additionally, StubHub is venturing into direct ticketing by partnering with content rights holders to offer tickets directly on its platform. This strategy, initiated in late 2024, accounted for $100 million of its $1.77 billion sales and opens avenues to capitalize on a larger share of the direct issuance market, estimated at $132 billion, on top of the existing $40 billion secondary market.
Nonetheless, potential risks exist, including competition from direct ticketing giants like Ticketmaster, owned by Live Nation, which may aggressively enter the secondary ticket market. Furthermore, with the conclusion of blockbuster events like Taylor Swift’s The Eras Tour and fluctuating consumer confidence, sustaining past growth levels presents a challenge.
Rumored to seek a $16.5 billion valuation in its IPO, StubHub would be trading at a significant premium compared to its peers, Vivid Seats and Live Nation, whose sales multiples are considerably lower. Despite its rapid growth and potential market share gains, the high premium could deter some investors at the IPO stage, yet the company’s progress under its returning founder continues to attract attention.
