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Note to private tech CEOs: The IPO market may look like it’s rocking but looks can be deceiving. If your company isn’t growing fast, and/or has a lot of debt, and doesn’t have either a crypto or AI angle, don’t expect a crush of demand. Check out StubHub, which fails on all the counts I just mentioned. Its stock tanked on its opening day as a public company, finishing down 6.4% from its IPO price, giving it a market capitalization of $8.4 billion. (And the stock was even lower in after-hours trading!) That’s what you call a broken IPO.
This outcome was entirely predictable. In fact, in April last year, when The Information’s Cory Weinberg scooped StubHub’s ambitions to go public at a valuation of around $16.5 billion, we wrote that $8 billion would be a more reasonable number based on comparable valuations. At the time we reported StubHub might call off its IPO if it couldn’t get close to the $16.5 billion number, which was the valuation at which it raised money in 2021, during the halcyon days. That was a fanciful notion even then, and unsurprisingly the company delayed the IPO last year and again this spring. Evidently, StubHub decided it couldn’t wait any longer. Even tech founders can’t escape reality (although a few certainly try).
There are plenty of lessons for others in the StubHub embarrassment. Enthusiasm among investors for crypto-related stocks is genuine—which makes sense, given that the Trump family has skin in the game and Trump’s administration is therefore pushing the rally. Investors have plenty of reasons to be bullish on AI-related stocks, even if valuations can seem wonky. But sentiment is much more fragile for shares in other sectors, such as software stocks in the broadly defined fintech market. The fate of Chime is telling: The fintech’s stock jumped 37% above its $27 IPO price on its first day of trading in June. But since then, Chime stock has slowly drifted down and in recent days it has traded between $23 and $24, below its IPO price.
StubHub’s experience is even worse. Live-event ticketing isn’t exactly a steady-eddy sector: It all depends on the flow of events (Taylor Swift’s tour last year boosted StubHub’s business, for instance). In StubHub’s case, its recent performance hasn’t been hopeful. We broke the news in late August that its first-half performance had fallen short of revenue and profit projections it gave lenders earlier this year. Revenue for the first half grew just 3%. Moreover, the company has a lot of debt and CEO Eric Baker’s voting control is out of whack with his ownership, as Cory described here. Baker is undoubtedly glad to have got the IPO done but no one should expect this stock to be a barnburner going forward.
Meta’s Big Day
We had Google’s Pixel day in August, Apple’s iPhone presentation last week and this week we’ve got Meta’s Connect event, where the social media giant typically unveils the latest doodads in AR/VR and smart glasses.
But unlike other such events (including Meta’s past Connects), where presentations kick off first thing in the morning (at least Pacific time), Meta decided this year to make its timing less convenient for all concerned. Its keynote was due to start at 5 p.m. Pacific, minimizing the same-day news coverage and the potential audience. Perhaps CEO Mark Zuckerberg is sick of competing with Donald Trump for news. Whatever the reason, you’ll have to wait until very late tonight for all the details.
In Other News
• Tesla has settled two lawsuits over crashes involving its Autopilot driver assistance software that were due to go to trial in California next month. The settlements come weeks after Tesla was found partially liable in a similar lawsuit over another crash in Florida.
• Amazon unveiled a range of new artificial intelligence-powered tools for sellers Wednesday, including a tool that will allow merchants to create ads through a conversational chatbot.
Today in The Information’s TITV
Check out today's episode of TITV in which we ask Workday’s CTO about the company’s $1.1 billion AI agent startup acquisition.
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