Shares of StubHub (STUB +3.44%) sank 38.7% in November, according to data from S&P Global Market Intelligence.
StubHub is a newly public stock, having had its initial public offering on September 17 at $23.50 per share. However, the bloom came off the rose for the stock in November, after first-quarter earnings seemed to disappoint the market's high expectations. Additionally, the United Kingdom's regulatory authorities passed measures that could threaten StubHub's U.K. business.
NYSE: STUB
Key Data Points
StubHub gets clipped after third-quarter earnings
In the third quarter, StubHub grew revenue 8% on gross merchandise volume (GMV) growth of 11%. However, GMV growth would have been 24% when adjusting for last year's Taylor Swift Eras tour. While the company recorded a ($1.3 billion) net loss on a GAAP basis, that was due to the one-time recognition of past employee equity awards. Adjusting for that, StubHub would have been profitable. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 21% to $67 million.
These aren't bad numbers by any means, but the company also didn't provide current-quarter guidance, which may have irked some investors used to this practice. On the conference call, management also alluded to how the fourth quarter would have difficult comps relative to the year-ago quarter.
Still, management expressed confidence int he long-term growth picture, with Chief Executive Officer Eric Baker saying:
Our debut quarter as a public company underscores the strength and resilience of our global marketplace. We delivered double-digit GMS growth, expanded market share, and significantly strengthened our balance sheet -- all while advancing our long-term strategy to make live entertainment more accessible for fans everywhere.
Things worsened the next day, however, when the United Kingdom's regulatory body launched an antitrust probe into StubHub's international brand viagogo, as well as other peers, regarding a variety of different sales tactics. There is also a rumor that the U.K. may consider banning the resale of tickets at a price above their face value. That would certainly be a blow to the secondary ticket market, and could lower commissions for StubHub.
Image source: Getty Images.
Opportunity in the early sell-off?
After the November sell-off, StubHub currently trades at a $4.2 billion market cap and a $5.3 billion enterprise value. That compares with $274 million in trailing 12-month EBITDA, which would denote an EV/EBITDA ratio of around 19.
That's not cheap, but isn't overly expensive for a capital-light company growing in the double digits (at least when adjusting for Taylor Swift). Moreover, StubHub is investing in new growth verticals, such as direct ticketing, advertising, and international expansion.
Since the stock is new to the public markets, investors may want to delve into this interesting story, especially in light of the nearly 50% haircut since the September IPO.
