Why StubHub Likely Won’t Buy a Ticket to the IPO Ride

Greetings!

Some people really can’t get past the idea that it’s no longer 2021. After a lot of resistance among private companies to raising money in the past year or two because of concerns about the valuation haircuts that would result, we’ve seen a lot more private funding down rounds and even IPOs at well below peak 2021 valuations (such as Reddit’s). And yet we’ve still got some holdouts. Today my colleague Cory Weinberg scooped the news that ticketing marketplace StubHub is aiming to go public this summer—but it may abandon the plan if it can’t get close to its late-2021 valuation of $16.5 billion. The principals at the company are going to learn the truth of the Rolling Stones line “You can’t always get what you want.” 

A more reasonable valuation for StubHub would be $8 billion or less, given the trading levels of comparable stocks, such as smaller rival Vivid Seats or maybe even eBay, as StubHub is essentially a version of eBay for tickets. The only possible way StubHub could hope to be valued at $16.5 billion is if it can persuade investors that ChatGPT is the power behind the ticketing throne (joke!). What makes StubHub’s expectations for a late-2021 valuation in mid-2024 even more mind-boggling is that the company is carrying around $2 billion in debt, which according to Cory’s story is more than 7 times StubHub's 2023 earnings before interest, taxes, depreciation and amortization, as estimated by Moody's. For those of you who don’t live and die by debt-to-Ebitda ratios (normal people, in other words), that’s a boatload of debt. Preferably companies should have debt-to-ebitda ratios of well below 5.