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In this photo illustration, the StubHub logo and webpage are displayed on a cell phone and computer monitor on April 17, 2024 in Los Angeles, California.
Mario Tama | Getty Images
StubHub’s (STUB) stock experienced a significant downturn, plummeting 24% on Friday, following the company’s decision to withhold financial guidance for the current quarter. This unexpected move, attributed to a strategic “long-term” focus, has triggered concerns among investors regarding near-term visibility.
CEO Eric Baker, during Thursday’s conference call with investors, cited the unpredictable nature of ticket on-sale timings as a key factor hindering accurate demand forecasting. He reiterated the strength of demand for live events while signaling a plan to offer a comprehensive outlook for fiscal year 2026 when the company announces its fourth-quarter results.
CFO Connie James elaborated on the timing dynamics, noting shifts in concert on-sale schedules traditionally concentrated in the fourth quarter. “This year, we are observing some shifts in the timing of these on-sales,” James stated. “Several large tours that would typically go on sale in the fourth quarter occurred earlier in late September. It remains to be seen how this concert on-sale timing dynamic plays out in November and December.” This volatility adds a layer of complexity in predicting short-term revenue streams and profitability.
Wedbush analysts expressed surprise at the absence of guidance in a Friday investor note. “The lack of forward guidance will pressure shares, with investor concern building around lack of visibility over the near-term,” the analysts wrote. Despite the negative sentiment, Wedbush maintains an outperform rating on StubHub stock.
The market’s reaction to the absence of guidance overshadowed what otherwise would have been celebrated as a solid first earnings report since StubHub’s return to the public markets. The company’s initial public offering (IPO) in September generated $800 million, marking a significant milestone.
However, StubHub’s post-IPO performance has been relatively muted compared to other recent market entrants in the tech space. The company also operates in a dynamic and competitive market that includes companies leveraging advanced algorithms for dynamic pricing and personalized recommendations, putting StubHub under pressure to innovate further.
Since its IPO at $23.50, StubHub’s stock has declined by nearly 40%.
Shifting focus to the positive aspects of the report, third-quarter revenue increased by 8% year-over-year, reaching $468.1 million. This figure exceeded the average analyst estimate of $452 million, according to LSEG data.
Gross Merchandise Sales (GMS), which reflect the total value of tickets sold, experienced a substantial 11% year-over-year increase, totaling $2.43 billion. This also surpassed Wall Street expectations, which had forecast $2.36 billion based on FactSet data. The solid GMS figures indicate continued consumer interest in live events and StubHub’s ability to facilitate ticket sales.
While revenue and GMS figures were positive, the ticket vendor reported a net loss of $1.33 billion, or $4.27 per share. This loss was primarily attributed to one-time stock-based compensation charges related to the company’s IPO. Investors are likely to scrutinize future earnings reports to assess the underlying profitability of StubHub’s core operations, especially in light of increasing competition and the potential for economic downturns impacting discretionary consumer spending. The company’s ability to effectively manage costs and achieve sustainable profitability will be critical to regaining investor confidence going forward.
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