December, 2025
Portfolio Review: StubHub (NYSE: STUB)
In September, StubHub completed its initial public offering at $23.50 per share, raising $800M at an $8.6B valuation. This milestone represents the culmination of co-founder Eric Baker's 25-year vision to democratize access to live events through technology.
At IPO, the stock opened at ~$25/share, stabilized in the $17–20 range, and then declined ~18% following Q3 2025 earnings, despite the Company beating consensus expectations across every reported metric. As of December 3rd, 2025, shares currently trade near $12.
We believe the market currently doesn’t fully understand the extent of the opportunity. We would therefore like to provide context, explain what happened, and share why our conviction remains strong.
Our Conviction Remains Strong
A Commanding Market Position
StubHub's market position has never been stronger. North American secondary market share has expanded to ~50%, up from 42% in Q4 2024, and is now four times the size of its nearest competitor, VividSeats.
Crossing the 50% threshold means that the Company should be reaching “escape velocity”, the point at which network effects become self-reinforcing and provide a powerful moat. We have witnessed the same dynamics amongst other category-defining platforms that followed StubHub’s marketplace approach, including Uber and Airbnb. At this scale, ticket sellers must list on StubHub to access the largest buyer pool, establishing it as the “must-list” platform; increased inventory attracts more buyers, improving conversion and reducing customer acquisition costs; superior transaction volume generates pricing intelligence that strengthens matching and fraud prevention; enhanced customer experience perpetuates organic growth, creating a virtuous cycle. The flywheel compounds.
Direct Issuance (DI): The Underappreciated Growth Vector
One of the most compelling potential growth engines is StubHub's positioning in Direct Issuance (DI), the primary ticketing market where Ticketmaster maintains over 70% share of an approximately $150B market. The Department of Justice lawsuit against Live Nation/Ticketmaster for monopolistic practices has created unprecedented openness among teams and venues frustrated with exclusivity arrangements. StubHub is the only credible, at-scale alternative capable of leveraging deep secondary market data to inform best-in-class dynamic pricing algorithms.
The strategic validation is already tangible. A multi-year exclusive partnership with Major League Baseball launches in 2026, with projected DI sales of $2B. Marquee early adopters, including the New York Yankees, multiple NBA franchises, and leading European football clubs, are creating momentum that other leagues and venues cannot ignore.
Critically, StubHub has transformed its capital model. Early DI agreements required StubHub to guarantee venues minimum revenue, arrangements that were capital-intensive and carried risk. New partnerships are commission-based with no upfront commitments, making this business infinitely scalable.
The trajectory speaks for itself. DI Gross Merchandise Sales (GMS) grew from $128M in 2024 to an estimated $245M in 2025 (+91%), with projections in the multiple billions by 2027. At the same time, the Company’s total GMS is projected to double reaching $15-20B by 2027 with take-rates around 20%. DI expands StubHub's addressable market from $41B (secondary only) to $194B, a ~5x increase in total market opportunity.
ReachPro – The Hidden Strategic Moat
An additional value driver for the business is ReachPro; StubHub's software solution which has over 50% market share with professional sellers (representing 80% of total ticket supply). This software constitutes an underappreciated competitive advantage. The platform enables sellers to manage inventory across all marketplaces, including StubHub, VividSeats, and Ticketmaster Resale, providing StubHub with visibility into competitor pricing, inventory levels, and demand signals. Once sellers build operations on ReachPro, integrated workflows, pricing algorithms, and historical data, this creates stickiness and guarantees StubHub first look access to inventory. ReachPro also serves as the foundation for sponsored listings launching in Q4 2025, positioning the Company to build a high-margin advertising business analogous to Google AdWords or Amazon Sponsored Products. Early validation includes a Booking.com brand partnership, with projected advertising revenue scaling from approximately $40M in 2025 to c.10x by 2027 at 60-80% gross margins.
A Strengthened Balance Sheet
The IPO raised $800M, with $750M deployed to reduce debt. Total debt now stands at $1.7B, eliminating over $180M in annual interest expense that will flow directly to the bottom line. This deleveraging fundamentally improves the Company's financial flexibility, overall bottom-line and margin profile.
Valuation - The Disconnect
At current prices of ~$12/share, StubHub trades at a substantial discount to EBITDA multiples of similar marketplaces benefiting from strong network effects.
For context, high-growth marketplaces such as Airbnb, Uber, and DoorDash trade at roughly 17x forward EBITDA while Live Nation, the closest comparable in live events, trades at approximately 13x forward EBITDA. Recent research reports from JPMorgan, Goldman Sachs, and Bank of America have established BUY ratings with 12-month price targets ranging from $24 to $46, implying 2-4x upside from current levels. EBITDA margins are projected to expand from current low-teens to 40% by 2027, driven by declining Sales and Marketing expenses as network effects supercharge organic acquisition, reduced interest expense from deleveraging, and DI scaling. The strategic investments that have compressed near-term margins, acquiring market share, and building DI infrastructure are working as intended.
Once category dominance is secured, the Company can shift from a growth investment mode to a profit-harvesting mode, which we expect will serve as a driver of multiple re-ratings.
Deconstructing the Sell-Off
Q3 2025 earnings actually exceeded expectations: GMS of $2.4B (+11% YoY, +24% excluding Taylor Swift touring effects from prior year), revenue of $0.5B (+8% YoY) beating consensus by approximately 4%, and adj. EBITDA of $67M (+21% YoY) at 14% margins, beating consensus by 157 basis points.
So what happened? Several factors triggered the sell-off
First, management transitioned from quarterly to annual guidance. An approach aligned with long-term oriented businesses. Music tour on-sale timing is inherently unpredictable, and quarterly guidance creates a false sense of precision. The Street interpreted the change as reduced visibility, which was particularly frowned upon by the market for a newly public company.
Second, an unusually high volume of ticket on-sales compressed into Q3, pulling forward activity typically occurring in Q4 and therefore implying a slower Q4. This is timing-related and not more fundamental, the total volume of events and tickets has not changed, merely quarterly distribution. The 2026 FIFA World Cup ticket launch in November-December represents one of the largest single-event opportunities in StubHub's history, yet without Q4 guidance, investors misread early-quarter softness as business deterioration.
Third, the UK announced plans to cap resale prices at face value for concerts, sports, and theatre, as part of consumer protection measures. While headline-grabbing, StubHub’s North American dominance, geographic diversification (UK represents 4% of revenues), and its status as a DI platform limit the impact of single-market regulatory actions aimed at the secondary ticketing market. The Company certainly plans to get ‘the truth out there’ about price-caps and their unintended consequences of creating a black market run by bad actors and driving increases in crime and fraud (as experienced in Ireland and certain territories of Australia). As such, any rules introduced in the UK should have little to no meaningful impact on StubHub’s top line or its ability to execute on its strategic plans.
Fourth and finally, market structure amplified volatility. Only 12% of shares are publicly traded, resulting in limited liquidity that exacerbates price swings. Additionally, IPO timing in late 2025 faced challenging macro conditions, including elevated rates and risk-off sentiment.
None of these factors alters the fundamental investment thesis. They represent short-term noise in a long-term compounding story.
Looking Forward – Continued Growth in Live Entertainment
StubHub's IPO marks the public market debut of a company that pioneered the two-sided marketplace model now ubiquitous across consumer internet. The market remains in early stages of recognizing StubHub's transformation from a secondary ticketing platform to a foundational infrastructure for live events.
A significant secular tailwind supports this thesis: as AI increases workplace productivity and generates more leisure time, consumers will increasingly crave authentic, shared human experiences as a counterbalance to digital isolation. Live events, which by definition cannot be replicated by AI, represent scarce, high-value experiences in an era of abundant AI-generated content.
The Company now serves an industry with $194B in annual transaction volume, with multiple vectors for continued share gains and monetization expansion. Near-term price action suggests underappreciation of:
· Sales & Marketing expense reduction due to market share gains and resulting organic acquisition growth.
· Balance sheet improvements from deleveraging.
· Strategic positioning in DI.
StubHub's post-IPO volatility is a humbling reminder that even our high-conviction investments face periods of market skepticism. However, it is critical to distinguish between price volatility and permanent capital impairment. Nothing in the past month has diminished the fundamental investment case. On every dimension that matters, market share, competitive positioning, margin trajectory, and balance sheet strength, our belief in the Company remains strong. We are confident that patient capital will be rewarded as StubHub's transformation becomes increasingly evident to the broader market.
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