All In Pricing And Regulatory Risks Will Pressure Ticketing Margins Over Time

Catalysts

About StubHub Holdings

StubHub Holdings operates a global online marketplace focused on buying and selling live event tickets.

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

• The push toward all in pricing in the US, which StubHub itself supported, is expected to keep conversion rates under pressure through at least May 2026. If customer price sensitivity persists longer than management anticipates, GMS and associated revenue could settle at a structurally lower level relative to pre rule change norms.
• Direct issuance relies on content owners embracing open, multichannel distribution without large upfront guarantees. If leagues, teams and promoters revert to favoring exclusive primary arrangements, StubHub could see lower ticket volumes and weaker take rate stability, weighing on long term revenue growth and marketplace margins.
• The model depends heavily on power sellers and enterprise style tools like ReachPro. Any regulatory pushback or policy shift around resale practices or speculative selling could limit seller activity on the platform, which in turn would affect ticket supply depth, pricing flexibility and future earnings power.
• Advertising, including sponsored listings and corporate partnerships, is still early. If users react poorly to more monetization of the ticket buying journey or if seller uptake is slower than expected, the company could see lower than hoped incremental revenue and limited operating leverage from this line of business.
• The marketplace benefits from global demand for large events such as the World Cup and major concert tours. Reliance on a concentrated slate of mega events and certain geographies means any pullback in event schedules or slower international expansion could leave GMS growth below current expectations, which would constrain net margin expansion and earnings progression.

Assumptions

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

• The bearish analysts are assuming StubHub Holdings's revenue will grow by 28.6% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -76.6% today to 28.2% in 3 years time.
• The bearish analysts expect earnings to reach $1.1 billion (and earnings per share of $3.48) by about January 2029, up from $-1.4 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $1.6 billion.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 4.5x on those 2029 earnings, up from -3.6x today. This future PE is lower than the current PE for the US Entertainment industry at 20.2x.
• The bearish 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 9.94%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• StubHub reports what it believes is nearly 20% GMS growth over the last 12 months and 11% GMS growth in the third quarter of 2025. If this were sustained, it could support higher ticket volumes and help underpin revenue and earnings rather than a weaker share price.
• The company describes its secondary ticketing marketplace as the largest globally by GMS, with roughly 40 million tickets sold annually across more than 200 countries and territories. This position could support durable take rates and net margins rather than long term pressure on profitability.
• Management highlights long term tailwinds in the global secondary ticketing market and an addressable direct issuance opportunity well in excess of US$100b. If this were realized, it could support higher gross merchandise sales and expand earnings instead of constraining them.
• StubHub is building out complementary businesses such as direct issuance and advertising, including sponsored listings and corporate partnerships. These initiatives could add new revenue streams alongside ticket fees and potentially support higher net margins and free cash flow over time.
• The company reports strong cash conversion, with trailing 12 month free cash flow before working capital and cash interest of US$279 million at roughly 100% of adjusted EBITDA, and a reduction in annual debt service from US$174 million to US$99 million. Together, these factors could support healthier earnings and reduce financial risk instead of pressuring the equity story.

Valuation

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

• The assumed bearish price target for StubHub Holdings is $13.0, which represents up to two standard deviations below the consensus price target of $22.82. 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 more bearish 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 $13.0.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2029, revenues will be $3.9 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 4.5x, assuming you use a discount rate of 9.9%.
  
• Given the current share price of $14.81, the analyst price target of $13.0 is 13.9% lower. Despite analysts expecting the underlying business to improve, they seem to believe the market's expectations are too high.
  
• 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.