Shares of StubHub (STUB) experienced a notable uptick on Monday, following the initiation of coverage by Wall Street analysts who generally expressed a positive outlook for the online ticketing platform. The company’s stock had faced a downward trend since its initial public offering (IPO) on September 17, indicating a challenging start in the trading market.
At least 12 analysts commenced coverage of StubHub stock over the weekend, with 11 of these reports recommending buy-equivalent ratings. Only one analyst provided a neutral assessment, a reflection of the newfound interest following the conclusion of the traditional quiet period post-IPO.
In recent trading sessions, StubHub stock rose nearly 5%, reaching $19.82. Since the IPO, however, the stock had struggled significantly. On its first trading day, shares closed 6% lower than the IPO price of $23.50, and by the end of the previous week, the stock had tumbled 20% from its initial offering price.
Analysts have adopted a more optimistic perspective compared to the stock’s early performance. BofA analyst Justin Post assigned a buy rating alongside a target price of $25, emphasizing StubHub’s status as North America’s largest secondary ticket marketplace, holding close to a 50% market share. In his analysis, he noted expectations for healthy growth in the resale market, share gains, a budding direct ticket issuance business, as well as advertising initiatives that are projected to enhance revenue beyond that of other internet marketplaces.
Similarly, Evercore ISI analyst Mark Mahaney started coverage with an outperform rating, setting an ambitious price target of $29. He highlighted the company’s impressive financial performance, projecting a 29% revenue growth for 2024, exceptional gross margins, and strong cash flow, further underscoring StubHub’s position in the online secondary ticketing market.
Wedbush analyst Scott Devitt also rated the stock as outperform, with a price target of $25, pointing out a multi-year growth potential driven by an anticipated inflection in the direct issuance segment.
A significant point of discussion surrounding StubHub’s future is its direct ticket issuance strategy, which pits the company against established competitors like Live Nation, the parent company of TicketMaster. Last month, StubHub announced a partnership enabling Major League Baseball teams to sell tickets directly through its platform—a move aimed at expanding its inventory for resale.
Devitt estimates that direct issuance and unsold tickets could represent a colossal $127 billion addressable market, vastly overshadowing the $30 billion market dedicated to secondhand ticket sales. However, he also cautioned about the execution risks involved as the company endeavors to grow this segment and secure inventory from content rights holders.
StubHub, co-founded by current CEO Eric Baker in 2000, saw a significant acquisition by eBay in 2007 for $310 million. The platform was later sold in 2020 to Viagogo for approximately $4 billion, thus becoming StubHub Holdings under Baker’s leadership.
As detailed in its IPO filing, StubHub projected a revenue growth of 29.5% for 2024, anticipating total revenues of $1.77 billion. For the first quarter ending in March, sales were reported at $397.6 million, marking a 10% increase, although the company did report a net loss of $22.2 million for Q1 and a cumulative loss of $2.8 million for all of 2024.
The stock market remains volatile, especially for recent IPOs. Investors and analysts will be watching closely as StubHub aims to harness the optimism reflected in this week’s analyst coverage, navigating its growth trajectory in the evolving ticket marketplace.
