Ticketing giant StubHub is gearing up for an initial public offering (IPO) and appears to be in a healthy financial position, according to a Bloomberg report. The company is said to have made $350 million in EBITDA for the year ending in March. This metric reflects a company’s profitability before accounting for certain financial expenses.
In simpler terms, StubHub’s earnings, excluding some financial nitty-gritty, were $350 million for the past year. That’s a good sign for investors who might be considering buying shares when the company goes public.
The report also states that StubHub raked in $1.4 billion in revenue during the same period. Revenue refers to the total amount of money a company makes from selling goods or services. So, StubHub brought in $1.4 billion by selling tickets and other services throughout the year.
Additionally, StubHub reportedly boasts $505 million in unlevered free cash flow. Free cash flow is the remaining funds a company has after covering its operating expenses and investments. Unlevered means it doesn’t take debt into account. So, StubHub has $505 million in cash readily available after covering its basic needs and reinvesting in its business, which is another positive indicator for potential investors.
StubHub’s Previous Attempts at Going Public
This isn’t StubHub’s first rodeo with going public. Back in 2022, the company reportedly explored a direct listing, which is a different way to enter the stock market compared to a traditional IPO. In a direct listing, a company doesn’t issue new shares, but existing shareholders can start selling their shares on a stock exchange. Reports suggested a direct listing could have valued StubHub at over $13 billion.
However, those plans seemingly fell through. The report mentions that StubHub confidentially filed with the Securities and Exchange Commission (SEC) in 2022, which is a necessary step for going public. The SEC is a government agency that regulates the stock market and protects investors.
Competition and Valuation Considerations
The article also highlights the performance of a StubHub competitor, Vivid Seats Inc. Vivid Seats went public in 2021 through a merger with a special purpose acquisition company (SPAC), which is essentially a shell company used to raise money for an eventual acquisition.
Vivid Seats reportedly had $142 million in adjusted EBITA and $712.9 million in revenue for 2023. However, their stock price has taken a hit since going public, decreasing by about 60%. Vivid Seats currently trades at a multiple of around 12.2 times earnings. A price-to-earnings ratio, or P/E ratio, is a common way to value companies. It relates a company’s stock price to its earnings per share.
This information might be used by analysts to estimate a potential valuation for StubHub when it eventually goes public. StubHub’s stronger financial performance compared to Vivid Seats could lead to a higher valuation, but the overall market performance and investor sentiment will also play a role.
StubHub’s reported financial figures paint a positive picture of the company’s health. Strong earnings, revenue, and free cash flow indicate a profitable and well-managed business. This could attract investors when the company eventually launches its IPO.
However, the success of the IPO will also depend on broader market conditions and investor confidence. The performance of competitors like Vivid Seats also serves as a reminder that even strong financials don’t guarantee a smooth ride in the stock market.
