Shares of StubHub (STUB -2.92%) were trading sharply lower this week, falling as much as 17%, according to data supplied by S&P Global Market Intelligence. As of 1:31 p.m. ET on Thursday, the stock was still down 16.8%.
The catalyst that sent the ticketing platform and entertainment specialist plunging was a hangover from its recent financial report and a bearish outlook by Wall Street.
Image source: Getty Images.
Post World Cup hangover
Late last week, StubHub announced record second-quarter results, but investors were still disappointed. Revenue rose 33% year over year to $573 million, but the company remained unprofitable, reporting a net loss of $40,000, or breakeven on a per-share basis. The results were fueled by gross merchandise sales (GMS) that climbed 34% to $3.1 billion.
StubHub saw a notable revenue lift from the World Cup during the quarter, but even that wasn't enough to push the company into profitability, as expenses surged 37%, outpacing its revenue growth. The company was beset by customer complaints about slow refunds and fraudulent third-party ticket sales. With the World Cup tailwinds in the rearview mirror, investors are wondering how StubHub will fare going forward.
Management increased its full-year outlook to GMS of $10.2 billion at the midpoint of its guidance, which investors found conservative. This suggests the company expects growth to slow in the back half of the year.
NYSE: STUB
Key Data Points
In the wake of the company's disappointing performance, Wall Street reacted accordingly, issuing a number of downgrades and price target adjustments. BofA Securities analyst Justin Post downgraded the stock to underperform (sell) from neutral (hold) and slashed his price target to $7.50, down from $11. The analyst cited the company's tepid outlook as cause for concern.
Indeed, rival Live Nation Entertainment raised its full-year outlook, expecting double-digit growth in attendance, revenue, and adjusted operating income (AOI), suggesting it may be taking market share.
Most investors are adopting a wait-and-see approach to the ticketing platform. As such, StubHub is simply not a hot ticket.
