The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Corrects the year Taylor Swift’s tour impacted gross ticket sales to 2023 from 2024 in the fourth paragraph.

By Jennifer Saba

NEW YORK, April 2 (Reuters Breakingviews) - StubHub is hawking a ticket to its big debut. The online marketplace to buy seats for everything from WrestleMania to Sabrina Carpenter unveiled plans for an initial public offering. Its last private valuation of $16.5 billion in 2021 implies a steep price of admission. Controlling shareholder and CEO Eric Baker would be lucky to sell at a 50% discount.

Frustrated by the cost of seeing Broadway’s The Lion King, Baker and a Stanford Business School classmate started StubHub 25 years ago. Since then, the company itself has been resold multiple times. Ebay EBAY.O bought it in 2007 for $310 million, before pushy hedge fund Elliott Management urged the auction site to offload assets. Baker’s new venture, European rival Viagogo, paid $4 billion for StubHub just as Covid-19 shuttered events worldwide.

There is much to applaud now. For one thing, StubHub provides a welcome alternative to dominant Live Nation Entertainment. The Department of Justice sued the $30 billion ticketing, venue and promotion company last year for anticompetitive behavior and is seeking to break it up. Baker sees an opportunity to expand into Live Nation’s stronghold on primary ticket sales.

Consistency is proving difficult, however. StubHub has generated more than $550 million of free cash over the past two years, but it also lost $2.8 million in 2024 on $1.8 billion of revenue, after netting more than $400 million of profit in 2023. Taylor Swift’s “Eras” tour accounted for a third of its gross ticket sales growth in 2023.

Live Nation LYV.N, whose share price has more than doubled since the depths of the pandemic, and smaller ticketing swap-meet Vivid Seats SEAT.O make sense for valuation comparisons. Airbnb ABNB.O and DoorDash DASH.O are also similar middlemen for buyers and sellers. Combined, the foursome trade at an average of 20 times 2024 EBITDA, according to Visible Alpha.

On that metric, StubHub’s enterprise is worth about $6 billion. Back out $1.3 billion of net debt, and the equity would be worth just $5 billion, two-thirds of the amount sought when it flirted with an IPO last year. To be valued at the same $16.5 billion would require a multiple of 55 times.

Such VIP status is unlikely, however. For one thing, President Donald Trump just signed an executive order targeting ticket scalpers and secondary markets. Consumers are also getting increasingly anxious about the economy, meaning they may start foregoing discretionary items like going to ball games and music gigs. Airlines already are bracing for less travel. And new stock issues have been falling flat with investors, too. Buying entry to the StubHub owners’ box will leave sellers with the cheap seats.

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CONTEXT NEWS

StubHub, an online marketplace to resell tickets for concerts and sporting events, disclosed plans for an initial public offering on March 21, about four years after a private funding round valued it at $16.5 billion.

The company reported 2024 revenue of $1.8 billion, a 29% increase from 2023. It swung to a net loss of $2.8 million from a $405 million profit the previous year.

JPMorgan and Goldman Sachs are the lead underwriters, with another 11 firms also listed in the prospectus.

(Editing by Jeffrey Goldfarb and Maya Nandhini)

((For previous columns by the author, Reuters customers can click on SABA/jennifer.saba@thomsonreuters.com))