StubHub, an online marketplace where people can buy and sell tickets to live events, is preparing to go public again, but its recent financial performance hasn’t gone as planned. Indeed, according to The Information, the company’s revenue for the first half of this year was $828 million, about 3% higher than last year but 6% below the $885 million it had forecast to lenders. Profits also came in roughly 7% under expectations. Interestingly, StubHub says that a big reason for this shortfall is a new U.S. law introduced in May that requires companies to show the full ticket price upfront, including all fees.
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The company estimates that the rule slowed down its growth in the North American secondary ticketing market by 10%. This demonstrates the unpredictability of the ticket resale business, which depends on major events like concerts that StubHub can’t control. As a result, that uncertainty could make investors cautious ahead of the company’s planned IPO in mid-September. Still, StubHub says it is performing better than some of its rivals. For instance, Vivid Seats’ (SEAT) stock has dropped more than 80% this year after its revenue fell by 21% in the first half.
At the same time, Live Nation (LYV), which owns Ticketmaster, also reported a decline in ticket resale sales due to weaker sports events and pricing changes. Therefore, StubHub is pushing forward with its IPO, even if it means accepting a lower valuation than the $16 billion it hoped for last year. In addition, StubHub plans to grow by selling tickets directly, although this part of the business is still small at about only 1% of gross sales.
Which Ticket Reseller Stock Is the Better Buy?
Turning to Wall Street, out of the two stocks mentioned above, analysts think that SEAT stock has more room to run than LYV. In fact, SEAT’s price target of $25 per share implies almost 41% upside versus LYV’s 6.4%.
