2 Broken IPOs That Can Bounce Back in 2026

It's generally been a strong year for the stock market, but not every debutante is rolling in 2025. Many IPO stocks are trading lower this year.

StubHub (NYSE: STUB) and Klarna Group (NYSE: KLAR) are both trading below their 2025 IPO prices. But even though they're broken today, they might not stay that way. In fact, I think they can bounce back next year. Let's look at these two stocks that could beat the market in 2026 after rough rookie seasons.

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1. StubHub

If you've ever needed tickets to a sold-out concert or sporting event, there's a good chance you're familiar with StubHub. But you probably don't know the origin story of the leading online marketplace for the resale of ticketed events.

Eric Baker's girlfriend wanted tickets to see The Lion King for its Broadway opening in the late 1990s. There were no tickets available, and his options boiled down to high-priced ticket brokers or sketchy scalpers on Times Square. There had to be a better way. So he teamed up with fellow Stanford MBA student Jeff Fluhr to co-found StubHub in 2000.

A few years later, there was a falling out between the two founders, and Baker left to create Viagogo, a rival resale marketplace in Europe. eBay (NASDAQ: EBAY) bought StubHub in 2007, only to flip it 13 years later to, yes, the Baker-led Viagogo in a $4 billion deal.

It was lousy timing on Baker's part. The deal for StubHub closed in February 2020, weeks before the pandemic shut down live performance venues worldwide. That was a painful year for the platform operator. But history has since been kind to the business.

StubHub is seeing revenue decelerate sharply for the fourth consecutive year, but that's not a deal-breaker. For one thing, revenue rose 8% in its latest quarter on a 19% jump in gross merchandise sales. Zoom out, and StubHub is a much better company now than it was when Baker bought back his former company.

StubHub generated revenue of $211.6 million in 2019, the last full year before COVID-19 temporarily unplugged live events. Trailing revenue now stands at $1.8 billion. When StubHub went public at $23.50 in September, it had an $8 billion valuation. The stock has been cut almost in half three months later. Its market cap of $4.3 billion is roughly where it was when it was acquired as a much smaller player five years ago.

There's also a strong argument for value investors to consider this growth stock. Analysts see StubHub clocking in with net income of $1.23 per share next year, valuing the stock at just 10 times forward earnings. Growth investors still have a projected 47% top-line jump in 2026.

There are near-term concerns that the United Kingdom will ban the resale of tickets above face value last month. This is something that would understandably weigh on StubHub's seller activity. Still, StubHub still has economies of scale in its favor. It's also growing faster than Live Nation Entertainment and Vivid Seats, the country's two other publicly traded ticketing specialists.

2. Klarna

The buy now, pay later (BNPL) boom has fueled a few recent IPOs tackling this fintech growing niche. Klarna went public at $40 three months ago. The U.K-based but global-minded business enters this new trading week going for 22% below its IPO price. It would be nice if you could have a PNBL platform -- pay now, buy later -- for buying broken IPOs.

There are several players in this space, but there's plenty of room for most of them to continue to grow. Revenue rose 28% in Klarna's first quarter as a public company, up a still impressive 25% on a like-for-like basis. Klarna's business grew even faster in its core markets of the U.S. and Europe. Yet Klarna stock still ticked lower following the report, despite exceeding expectations.

Klarna still has room for growth. It continues to sign up new merchants worldwide to its platform. The take rates are small, but Klarna makes it up in volume. It reported $903 million in revenue on $32.7 billion in gross merchandise volume in its latest quarter.

If there's a shakeout over time, Klarna will probably be one of the companies leading the way in consolidating the BNPL market. It's an artificial intelligence-forward company, leaning on AI tools for stronger connections between shoppers and merchants.

Rick Munarriz has positions in StubHub. The Motley Fool has positions in and recommends Klarna Group and eBay. The Motley Fool recommends Live Nation Entertainment and has a disclosure policy.