StubHub Plans Summer IPO in New Test of Market

Working in StubHub’s favor is the fact that a post-pandemic boom in sports and live concerts, particularly last summer’s Taylor Swift and Beyoncé tours, has bolstered its business. It generated about $1.4 billion in revenue in the year ending September 2023, up about 40% from the same period the previous year, according to credit analysis reports by Moody’s Investors Service. The report said the company had nearly $250 million in earnings before interest, taxes and amortization during the same period, up significantly from the previous year.

The company, which has been working with JPMorgan and Goldman Sachs on a listing for the past two years and has already confidentially filed IPO paperwork with regulators, hasn’t yet set a date for its public listing, the people said. It had held off on an IPO in recent years after replacing its finance chief, experiencing accounting difficulties and encountering poor market conditions. With the market showing signs of recovery, it has recently picked up plans with the intention of hitting the public markets sometime in the next several months. Online ticketing rival SeatGeek has also been seeking a potential listing this year, which means similar companies might end up vying for investors’ attention at around the same time.

The version of StubHub that would go public is bigger than the ticketing company founded in 2000 and later acquired by eBay. The e-commerce giant sold StubHub for about $4 billion in early 2020 to a European ticketing company called Viagogo, just before the pandemic wiped out live events for more than a year. (The StubHub division was generating about $1 billion in annual revenue before the sale.) Eric Baker, a co-founder of the original StubHub, was running Viagogo. Baker had been pushed out of StubHub several years earlier and went on to found Viagogo. After buying back StubHub, he renamed the combined business StubHub Holdings.

StubHub is hoping investors will greet it warmly. Executives have discussed a desire to land a valuation at the last price at which it raised money in December 2021. That would imply investors value StubHub like Airbnb, at a multiple of more than nine times this year’s expected revenue. Moody’s Investors Service estimated StubHub would generate about $1.7 billion in revenue this year.

That’s a steep valuation compared to rival firm Vivid Seats, a smaller, U.S.-focused StubHub competitor that went public through a special-purpose acquisition company in 2021. It trades at only 1.4 times its expected revenue this year. StubHub, which has about $1 billion in cash, excluding debt, could put off the IPO if it doesn’t get the valuation it wants.

Cullen Rose, co-founder at the hedge fund Stoic Point Capital Management, said StubHub “could face challenging valuations dynamics” in the IPO because of its competitor’s low multiple. “StubHub would also likely come public with a significant debt burden and needing to explain why its once dominant U.S. business hasn’t grown much since 2019,” said Rose, whose firm is a Vivid Seats shareholder.

Moody’s estimated in a report last month that StubHub’s debt was about 7.3 times its earnings before interest, taxes, depreciation and amortization, which is an unusually high ratio of debt to profits. Moody’s expected the ratio would fall this year to 5.6, “driven by revenue growth of at least 10% annually, continued strong demand for live events and flat marketing spend.” But a debt-to-Ebitda ratio above 5 is still relatively high. The company recently pushed out the maturity of its loans to 2030 by extending its high-yield debt.

The debt extension reduces the pressure on StubHub to go public soon, JPMorgan wrote to clients. The deal “allows StubHub to enter a stronger market with a stronger position, which will yield a more front-footed posture on valuation.”

Much of the debt carried by StubHub dates to Baker’s 2020 acquisition of the company, financed with equity from investors such as Bessemer Venture Partners, WestCap and ​​Madrone Capital Partners, a venture capital firm associated with Rob Walton, the eldest son of Walmart founder Sam Walton.

In its analysis last month, Moody’s noted that StubHub faces high competition in the ticketing industry from Vivid Seats, Ticketmaster (owned by LiveNation) and privately held SeatGeek. Moody’s said StubHub had “leading market positions in most major global regions including North America.” The company has said ticket sales from Beyoncé and Taylor Swift shows made up nearly 40% of its concert sales globally last summer.

StubHub’s road to IPO has faced other complications. The company has spent the years since the acquisition migrating its back-end  software onto Viagogo and at times has struggled with the accounting of its financials. Moody’s said the company needed to restate its 2022 financial statements. The company has also swapped out its chief financial officer, last year hiring Connie James, with an eye toward a 2024 IPO, The Information previously reported.