Why StubHub Stock Tanked by 10% Today
Key Points
It posted an attributable net loss in its second quarter.
Analysts were collectively expecting a decent profit.
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StubHub Holdings (NYSE: STUB) stock wasn't quite a golden ticket on Thursday. Investors sold out of the event ticketing company's equity rather aggressively after it released a dispiriting earnings report. The shares closed the day more than 10% down in price.
Big spender
This, despite StubHub posting strong growth numbers in its second quarter. It took in revenue of just over $573 million in the period, for a 33% year-over-year increase. That was on the back of a 34% rise in gross merchandise sales (GMS) to $3.1 billion. Much of these gains, however, came from soccer's World Cup.
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StubHub narrowed its attributable net loss under generally accepted accounting principles (GAAP) to $40,000 (effectively zero on a per-share basis) from the year-ago deficit of almost $76 million.
But bottom-line expectations were relatively lofty for the quarter. Analysts tracking StubHub stock were expecting a net profit, and an impressive one at that, of $0.24 per share. At least the company beat on revenue, as the pundit consensus was a bit north of $532 million.
In the quarter, StubHub didn't seem to be able to rein in its spending. Total costs and expenses rose 37% to nearly $554 million; that's a higher percentage than the revenue change. General and administrative spending was a culprit here, nearly doubling to over $146 million.
Not quite a win
At least StubHub is becoming slightly more hopeful about the future. It raised its full-year guidance for GMS to $10.1 billion to $10.3 billion, up from the previous range of $9.9 billion to $10.1 billion. However, it maintained its non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast of $400 million to $420 million.
I believe investors, rightfully, feel that StubHub should have had a very profitable quarter, given the World Cup's extreme visibility and popularity. It really feels as if management needs to get a grip on those expenses; it's always disheartening when a business can't take advantage of a fine opportunity.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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