Why a $127 Million StubHub Bet Now Dominates This Fund's Portfolio Despite a 40% Post-IPO Drop

On November 14, California-based StepStone Group disclosed a new position in StubHub (NYSE:STUB), acquiring nearly 7.6 million shares valued at an estimated $127.3 million.

What Happened

StepStone Group disclosed a new stake in StubHub, purchasing nearly 7.6 million shares during the third quarter, as detailed in its SEC filing dated November 14. The position, valued at $127.3 million as of September 30, represents a substantial addition to the fund’s U.S. equity holdings.

What Else to Know

This new position in StubHub accounts for 59.9% of StepStone Group LP’s reportable U.S. equity assets as of quarter-end.

Top five holdings after the filing:

• NYSE:STUB: $127.3 million (62.7% of AUM)
• NYSE:KRMN: $21.1 million (10.4% of AUM)
• NYSE:PATH: $17.2 million (8.5% of AUM)
• NASDAQ:GENVR: $11.2 million (5.5% of AUM)
• NASDAQ:DKNG: $6 million (3% of AUM)

As of Friday, shares of StubHub were priced at $13.95, down 40% from their September IPO price of $23.50 per share.

Company Overview

Company Snapshot

• StubHub operates a global digital marketplace for secondary ticket sales, facilitating transactions for sports, concerts, theater, and live events across more than 200 countries.
• The company generates revenue primarily through transaction fees charged to buyers and sellers for each ticket sold on its platform.
• Its primary customers include individual ticket buyers, event-goers, and ticket resellers seeking access to live entertainment events worldwide.

StubHub is a leading technology platform in the secondary ticketing industry, leveraging its scale and digital infrastructure to connect millions of buyers and sellers. The company’s strategy centers on providing a secure and efficient marketplace for live event tickets, supporting a diverse range of event categories. StubHub’s competitive advantage lies in its broad international reach and established brand, positioning it as a key player in the global event ticket resale market.

Foolish Take

StepStone’s move reflects conviction in StubHub’s business durability despite its short-term stock performance. Secondary ticketing is cyclical and sentiment-driven, but demand for live events has proven far more resilient than most consumer categories, even as discretionary spending tightens.

StubHub’s latest quarter reinforces that point. Gross merchandise sales reached $2.4 billion, up 11% year over year, or 24% excluding the Taylor Swift tour, while revenue rose 8% to $468 million. Adjusted EBITDA also climbed, up 21% to $67 million, with margins expanding to 14%, signaling improving operating leverage even amid public-company transition costs. The headline GAAP loss was driven almost entirely by a one-time $1.4 billion stock-based compensation charge tied to the IPO, not underlying business deterioration.

Equally important for long-term holders, StubHub used IPO proceeds to reduce debt by roughly $750 million, bringing net leverage down to 3.9 times trailing adjusted EBITDA and materially strengthening its balance sheet. Compared with the rest of the portfolio, this position stands out as a high-conviction bet on cash flow normalization rather than near-term multiple expansion.

Glossary

13F reportable assets: U.S. securities that institutional investment managers must disclose quarterly to the Securities and Exchange Commission (SEC) in Form 13F.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Portfolio weight: The percentage of a portfolio's total value allocated to a specific holding or asset.
Alpha: A measure of an investment’s performance relative to a benchmark, indicating value added or subtracted by active management.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Forward price-to-earnings ratio: A valuation metric comparing a company’s current share price to its expected future earnings per share.
Enterprise value to EBITDA: A valuation ratio comparing a company’s total value to its earnings before interest, taxes, depreciation, and amortization.
Secondary ticket sales: The resale of event tickets after their original purchase, typically through online marketplaces.
Transaction fees: Charges collected by a platform or intermediary for facilitating the purchase or sale of goods or services.
Market capitalization: The total value of a company’s outstanding shares, calculated as share price times number of shares.
Digital marketplace: An online platform where buyers and sellers conduct transactions for goods or services.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends UiPath. The Motley Fool has a disclosure policy.