StubHub gets thumbs up from tech-focused investment bank; shares up 6%

Wedbush initiated coverage on StubHub with an "outperform" rating and a $25 price target, driving the stock up 6% to $20, based on its view that the company is evolving into a diversified ticketing platform. The bank highlights StubHub's potential to disrupt the primary market through its "direct issuance" model, projecting gross merchandise sales from this segment to reach $12.7 billion by 2028, alongside continued dominance in the resale market and international expansion. Wedbush anticipates significant EBITDA margin expansion and over $600 million in ad revenue by 2028, concluding that the risk-reward is favorable given its current valuation at 8.6 times forecast 2026 EBITDA.

Analysis

Wedbush initiated coverage on StubHub with an "outperform" rating and a $25 price target, leading to a 6% stock increase to $20 in early afternoon trading. This positive outlook is driven by StubHub's strategic shift from a pure resale marketplace to a diversified ticketing platform, positioning it to disrupt the primary market. The firm's analysis highlights the potential for significant growth through this evolution.

A core component of this strategy is the "direct issuance" model, which Wedbush projects to grow gross merchandise sales from $240 million this year to $12.7 billion by 2028, accounting for 40% of total ticket volume. This is bolstered by a multiyear partnership with Major League Baseball and continued dominance in the North American resale market, where StubHub holds 42% share and aims for over 50% by 2026, alongside international expansion via Viagogo.

Financially, Wedbush forecasts adjusted EBITDA margins to expand by over 30 percentage points within three years, driven by normalized marketing spend and ramping advertising services, with ad revenue potentially exceeding $600 million by 2028. While regulatory scrutiny and execution risks for direct issuance exist, the current valuation of 8.6 times forecast 2026 EBITDA, coupled with robust live entertainment spending, suggests a favorable risk-reward profile for investors.

Key Decisions for Investors

• Investors should closely evaluate StubHub's strategic pivot into direct issuance and its potential to capture a significant share of the primary ticketing market, as highlighted by Wedbush's $12.7 billion GMS projection for 2028.
• Monitor the company's execution on scaling its new business model, international expansion efforts, and the realization of projected EBITDA margin expansion and ad revenue growth.
• Assess the identified risks, including regulatory scrutiny around pricing transparency and operational challenges in integrating direct issuance, against the current valuation and the overall bullish outlook.