In Q3, billionaire Stanley Druckenmiller’s Duquesne Family Office made the unusual move of buying 4.3 million shares of event ticket selling platform StubHub (NYSE:STUB), which went public on September 16th. Though it’s somewhat strange for an investor like Druckenmiller to buy an IPO, StubHub evidently represented a rare exception to the rule. Why did Stan Druckenmiller buy StubHub, and could the stock be worth looking at in today’s market?
What’s Druckenmiller Thinking?
As a macro-driven investor, Druckenmiller may have been interested in StubHub due to both the long-term growth potential of the ticket market as a whole and StubHub’s position within that market. Although a somewhat soft economy is currently exerting some downward pressure, the overall trend for event ticket sales is expected to be positive over a longer time horizon. By 2030, the online event ticketing market is expected to reach nearly $90 billion, representing an annualized compounding growth rate of about 6 percent from where the market stood as of 2023.
StubHub also occupies a strong position in the ticket ecosystem, acting as a two-sided platform that facilitates transactions between buyers and sellers without actually selling the tickets itself. This business model lets StubHub generate revenue from fees, creating significant potential for scalability and relatively high margins.
StubHub’s Losses So Far
While Druckenmiller is known for an uncanny ability to beat the market during both good times and bad, the StubHub investment hasn’t been among his most successful so far. Druckenmiller’s average cost basis for STUB was $16.84. Since he bought it, the price has declined by nearly 30 percent, with shares currently priced at $11.86.
While it’s not terribly unusual for a stock to sell off after an IPO, Druckenmiller clearly thought that nearly $17 per share was still a reasonable price for the stock. Although the business’s position within its market goes some way toward explaining this, it’s likely necessary to dig a bit deeper to find the value Druckenmiller may see in the stock.
Q3 Earnings StubHub
To get a sense of where the unappreciated value in StubHub could be, the business’s Q3 earnings report is a solid starting point. During that quarter, revenue rose 8 percent to $468 million, driven by an 11 percent gross merchandise sales growth to a total of $2.4 billion. StubHub also used the proceeds from its IPO to repay about $750 million worth of its debt, thus significantly strengthening its balance sheet.
Where the report becomes even more interesting, however, is in the category of net income. For the quarter, StubHub reported a GAAP net loss of $1.3 billion, a massive loss for a business that only generated $468 million in revenue during the same period. This loss, however, was driven by a one-time $1.4 billion stock-based compensation charge that was associated with the IPO itself. Excluding this one-time charge, StubHub would already have been profitable in its debut quarter.
With this stock-based compensation charge behind it, StubHub could have the potential to quickly both achieve and expand its profitability. For 2025, analyst earnings estimates suggest that StubHub will lose about $5.54 per share, driven overwhelmingly by the $4.27 loss already recorded in the third quarter. In 2026 and 2027, however, the business is expected to generate positive EPS of $1.23 and $2.44, respectively.
Using these projections as rough guidelines for StubHub’s possible trajectory, it’s not difficult to see why shares may have looked attractive at higher price closer to the IPO. At Druckenmiller’s average cost of $16.84, the stock would have been priced at only about 13.7 times its projected 2026 earnings and just 6.9 times 2027’s projected EPS.
Will Ticket Resales Be Banned?
If StubHub had a more or less straight shot to the earnings projected for it over the next couple of years, the stock would likely look like a deeply undervalued buy. It’s important to understand, however, that there are some fairly substantial risks that could crop up and impede StubHub’s projected growth.
The largest of the risks facing StubHub is likely regulation on secondary markets for tickets. Recently, for instance, the UK government announced plans to ban the resale of event tickets above their face value. Earlier in the year, the Trump administration released an executive order directing the FTC to combat what it described as “exploitative ticket scalping.” While StubHub remains a strong platform for ticket resale that serves a clear market need, expansive regulatory actions meant to curb excessive pricing in the live ticket secondary market could unintentionally harm the business and deter legitimate resale activity.
In the immediate future, a weaker consumer economy could also affect StubHub and other ticket businesses. Declining ticket sales are already impacting major music festivals, and the trend could grow worse as consumers keep tightening their belts to deal with inflation and a weaker labor market. It’s worth noting that StubHub hasn’t been the only business whose stock could be negatively impacted by this trend. Event marketplace Eventbrite (NYSE:EB), for instance, has seen its stock sell off by over 34 percent in the last 12 months, partially driven by pressures on ticket sales.
Why Did Stanley Druckenmiller Buy StubHub?
Ultimately, Druckenmiller’s decision to buy StubHub likely had to do with the combination of a strong position in a long-term growth market and the possibility of significant undervaluation. While there are a fair number of risks surrounding StubHub, especially those of regulatory action against the secondary ticket market, StubHub’s potential upside may substantially outweigh its downside.
Taking this view, risk-tolerant investors may still find STUB an interesting stock today. At a discount of almost 30 percent to what Druckenmiller paid for his shares, the stock could be very attractively priced if it can deliver anything like the kind of earnings growth projected for it over the next couple of years. Though StubHub may not be the most conservative stock in the market, its potential for outsized returns could make it a potential buy for investors looking for the possibility of strong long-term gains in an industry that’s currently a bit beaten down.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.