Why StubHub Stock Cruised Nearly 17% Higher Last Month

StubHub (NYSE: STUB) was the ticket to stock market gains for many investors in April. Largely on the back of favorable legal developments in its industry, plus a tie-up with a top artificial intelligence (AI) developer, market players were eager to buy the company’s shares. Across the month, its price rose by almost 17%.

Legal matters

There were actually two legal events that boosted sentiment on StubHub stock. The first occurred on April 9, when the company agreed to pay $10 million to settle charges brought by the government’s Federal Trade Commission (FTC).

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The FTC had basically accused StubHub of violating the agency’s rule on unfair or deceptive fees, specifically the part that mandates most charges attached to a ticket’s price be disclosed upfront.

In its press release announcing the settlement, the FTC said that StubHub will dispense it by providing monetary relief to eligible customers.

The following week, the jury in an antitrust lawsuit brought by 33 states and the District of Columbia against Live Nation Entertainment found the company — specifically its two key subsidiaries Live Nation and Ticketmaster — liable for monopolistic practices. The states and D.C. have requested structural relief from the judge in the case, in the form of a divestiture of Ticketmaster.

As for that AI deal, StubHub announced near the end of the month that it has integrated its system with Claude, the popular AI assistant developed by Anthropic. StubHub said that Claude users will be able to access the company’s full catalog of live events, and monitor real-time pricing and availability.

Is the trend really a friend?

Of these developments, the most impactful is the Live Nation/Ticketmaster ruling. Those two business units are basically accused of using their power to lock venues and producers into their services, in numerous instances for long stretches of time. If done effectively, the separation of the pair would theoretically give clients more choice and therefore boost opportunities for peers such as StubHub.

The company’s settlement with the FTC over deceptive fees, meanwhile, resolves a potentially significant legal problem for a relatively small payout. Yes, $10 million is a pile of money to you or me, but well-funded StubHub had over $1.2 billion in greenbacks at the end of last year. The fine is a drop in the bucket for it, and the company can now get on with its life.

The Anthropic news is also encouraging, because Claude is a popular, well-regarded AI platform, so StubHub will certainly earn some business simply by having it as a channel. It also shows the company is forward-thinking and proactive in its use of advanced technology, a tendency that’s comforting for investors these days.

My top concern with StubHub (and while I’m at it, the broader live events ticketing space) is that one-off experiences are very much in vogue now — look at the often hard-to-believe monster prices of top events like this year’s Coachella for proof. I’d worry that this isn’t sustainable, particularly given the inflation that continues to bite in this country, so I’d be hesitant to buy stocks in the sector.

Should you buy stock in StubHub right now?

Before you buy stock in StubHub, consider this:

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Live Nation Entertainment. The Motley Fool has a disclosure policy.

Why StubHub Stock Cruised Nearly 17% Higher Last Month was originally published by The Motley Fool

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