Global Ticketing Platform Will Benefit From Direct Issuance And Advertising Expansion

Catalysts

About StubHub Holdings

StubHub Holdings operates a global online marketplace for buying and selling tickets to live events across sports, music and entertainment.

What are the underlying business or industry changes driving this perspective?

• Growing global appetite for live events and event tourism, supported by StubHub's reach across more than 200 countries and territories and partnerships like Booking.com, can support sustained GMS and revenue growth as more cross border and travel related tickets flow through the platform, which can also support higher overall earnings.
• Expansion of direct issuance, including the Major League Baseball agreement, additional MLB teams and independent music festival promoters, positions StubHub to participate more directly in a ticketing market management says is well in excess of US$100b. This can influence long term revenue scale and cash flow.
• Rising adoption of StubHub's ReachPro point of sale software by power sellers, with Q3 2025 cited as the largest quarter of new adoption, deepens seller stickiness and data access. This can support higher take rates durability, lower acquisition costs and structurally strong net margins.
• Early build out of advertising, including sponsored listings integrated into ReachPro workflows and brand partnerships such as Booking.com, creates new high margin revenue streams on top of existing ticket economics. This can support gross margin and EBITDA margin expansion over time.
• A single modern global technology stack and growing use of data and AI driven pricing, marketing and product decisions across what management describes as the largest floating price marketplace for live events provide a foundation for ongoing product improvements. This can support conversion, repeat purchase behavior and ultimately revenue and free cash flow.

Assumptions

This narrative explores a more optimistic perspective on StubHub Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming StubHub Holdings's revenue will grow by 49.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -76.6% today to 25.9% in 3 years time.
• The bullish analysts expect earnings to reach $1.6 billion (and earnings per share of $4.35) by about January 2029, up from $-1.4 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $1.1 billion.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 9.6x on those 2029 earnings, up from -3.3x today. This future PE is lower than the current PE for the US Entertainment industry at 18.9x.
• The bullish analysts expect the number of shares outstanding to decline by 6.06% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.06%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• All in pricing in the US is estimated by management to have a 10% one off impact on the size of the North American secondary ticketing market, and StubHub is already seeing lower conversion as buyers adjust to the new format. This could weigh on GMS and revenue, and limit operating leverage if demand or pricing does not fully adjust over time, keeping pressure on net margins and earnings.
• The business is leaning into market share gains by deliberately reducing take rates from 20% of GMS to 19%, and by stepping up sales and marketing to 54% of revenue. This may entrench lower unit economics if competitors respond or acquisition costs stay elevated, making it harder to reach or sustain the higher profit margins and earnings trajectory implied in a bullish case.
• Direct issuance and open distribution are described as a very large opportunity, but the model still depends on rights holders choosing to list inventory multichannel without minimum guarantees. Slower than expected team and promoter adoption, or a shift back toward guaranteed economics, could limit ticket volume on the platform and constrain revenue and earnings potential from this new line of business.
• Advertising and sponsored listings are still early, with planned rollout timing and seller interest but no quantified contribution yet. If adoption is slower than hoped, or if StubHub holds back to protect user experience, the high margin revenue mix shift investors might expect may not materialize, which would reduce the scope for gross margin and EBITDA margin expansion.
• StubHub carries US$1.1b of net debt with net debt at 3.9x trailing adjusted EBITDA and a fixed 5.8% interest cost on remaining term loans. If GMS growth or cash conversion slows for any reason, more cash could need to go to debt service rather than reinvestment or shareholder friendly uses, which would pressure free cash flow and keep earnings more sensitive to financing costs.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for StubHub Holdings is $39.29, which represents up to two standard deviations above the consensus price target of $23.8. This valuation is based on what can be assumed as the expectations of StubHub Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $45.0, and the most bearish reporting a price target of just $16.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $6.1 billion, earnings will come to $1.6 billion, and it would be trading on a PE ratio of 9.6x, assuming you use a discount rate of 10.1%.
  
• Given the current share price of $13.45, the analyst price target of $39.29 is 65.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.