Anyone who has ever bought a ticket to a concert or professional sports event on the secondary ticket market probably has strong feelings about the process and the cost.
I know I do, even as I hit purchase while swearing at the bots and scalpers that have bought all the tickets on the primary marketplace before regular people like me even have a chance.
The secondary marketplace is viewed by many as a racket and faces widespread criticism — just look at reddit.com/stubhub and you’ll see how people feel.
It’s a very profitable business.
StubHub is the most well known player in this sector — in 2024, StubHub reported more than 40 million tickets sold to over 1 million unique sellers globally, according to Industry Previews — but there are plenty of competitors, including SeatGeek, Vivid Seats, Gametime, and TickPick.
StubHub is accused of failing to disclose risks to investors. Photo by Michael M. Santiago on Getty Images
Now StubHub is facing a wave of legal challenges after its $758 million initial public offering (IPO) in September, as investors claim the company failed to disclose material financial risks ahead of going public.
The complaint, filed November 24 in federal court in Manhattan by Glancy Prongay & Murray on behalf of investor Daniel Salabaj, alleges that StubHub’s registration statement misled shareholders by omitting critical information about the company’s cash flow problems.
Salabaj purchased shares during StubHub’s IPO, when roughly 34 million shares were sold at $23.50 each.
2024 annual revenue: About $1.77 billion.Source: Bloomberg
2024 gross merchandise sales (GMS): Approximately US$8.7 billion (total value of tickets sold through the marketplace) in 2024.Source: Industry Previews
Q3 2025 (three‑month period ending September 30, 2025) revenue: $468.1 million.Source: StubHub
GMS for quarter:$2.4348 billion, up 11% YoY.Source: StubHub
Adjusted EBITDA: $67 million, representing a 14% margin.Source: StubHub
Profit/loss (Q3 2025): Net loss of $1.294 billion, largely driven by a one‑time stock‑based compensation charge related to the IPO.Source: StubHub
“The complaint filed in this class action alleges that the Registration Statement was materially false and/or misleading, and failed to disclose material adverse facts about the Company’s business, operations, and prospects,” said the law firm in a press release.
At least eight other law firms, including Robbins LLP, Pomerantz LLP, and Rosen Law Firm, have announced investigations into StubHub’s financial disclosures and IPO process.
The legal action follows StubHub’s first quarterly earnings report as a public company, filed November 13. The filing showed a free cash flow of negative $4.6 million for Q3 2025, compared with positive $10.6 million in the same quarter a year earlier.
Operating cash flow fell 69% year over year to $3.8 million from $12.4 million, per the earnings report.
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StubHub attributed the decline to changes in the timing of cash receipts and payments tied to ticket sales, as well as the timing of vendor payments. The company reported a net loss of $1.3 billion in Q3, up sharply from $33 million a year earlier, though revenue grew 8% to $468 million, as reported on Yahoo Finance.
Shares plunged following the earnings report. On November 14, StubHub stock dropped 20.9%, or $3.95 per share, to close at $14.87. The stock hit an all-time low of $10.31 on November 20 and was trading at $12.73 on November 25, down roughly 46% from the IPO price, per Yahoo.
The lawsuit names StubHub Chief Executive Officer Eric Baker, and the underwriters of the IPO — including JPMorgan Chase, Goldman Sachs, and Bank of America — as defendants. The legal filings allege that the company failed to disclose operational changes that significantly affected its cash position, leaving investors in the dark about the real financial health of the business.
Plaintiffs in the class action include anyone who purchased or otherwise acquired StubHub shares through the IPO. Investors have until January 23, 2026, to step forward to serve as lead plaintiff in the case.
“We’re focused on whether StubHub’s IPO materials may have misled investors about known trends in its business that, when disclosed in November, wiped out over $1 billion of market capitalization,” Attorney Reed Kathrein of Hagens Berman said in a news release. Hagens Berman also aims to represent investors.
The StubHub case highlights ongoing scrutiny over the transparency and governance of secondary ticketing platforms. StubHub has long faced criticism from consumers and regulators for high service fees and opaque pricing, accusations that echo the concerns now raised by investors.
The lawsuit is an investor-focused action but it could bring about changes for consumers, too.
If StubHub is found to have misled investors, it may face pressure to improve transparency across its platform. Ultimately, this could mean clearer pricing, fewer hidden fees, and more honest disclosures for ticket buyers.
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It may also push the company to reform its business practices, potentially affecting ticket availability, service levels, and pricing in the broader resale market. High-profile legal scrutiny can also encourage industry-wide reforms, empowering consumers to demand fairer policies in ticket sales.
“We focus relentlessly on cash flow generation. Our business model efficiently converts adjusted EBITDA into free cash flow, providing us the financial flexibility to reinvest in the business and optimize our capital structure,” StubHub Chief Financial Officer Connie James said during the earnings call earlier this month.
StubHub operates in an increasingly competitive secondary ticket market alongside rivals such as Ticketmaster Resale and SeatGeek. The company has built a reputation as a go-to platform for high-demand concert and sports tickets, but it has also faced repeated consumer complaints about fees, pricing transparency, and alleged monopolistic practices.
Gametime United, Inc. (Gametime): Estimated ≈ $61 million/yearSource: Growjo
TickPick: Estimated ≈ US$13.7 million/year (latest public estimate) Source: Growjo
The StubHub case is still in its early stages, but legal experts suggest that if the investor plaintiffs succeed, it could lead to changes in how secondary ticketing companies communicate financial risks to investors and potentially influence operational practices that affect consumers.
For now, the stock remains below its IPO level, and the lawsuits serve as a reminder of the potential risks associated with investing in companies operating in high-fee, high-variance markets like ticket resale.
Investors who purchased StubHub shares in (or traceable to) the IPO are encouraged to contact the lead counsel before the January 23 deadline to participate in the class action.
September 17, 2025: StubHub launches IPO, issuing around 34 million shares at $23.50 each, raising $758 million.
November 13, 2025: StubHub files its first quarterly earnings as a publicly held company, disclosing a free cash flow of negative $4.6 million, 69% decline YoY.
November 14, 2025: StubHub’s share price drops nearly $21% in response to the earnings disclosure.
November 20, 2025: StubHub shares hit an all time low of $10.31, a 56% drop from IPO price.
November 20, 2025: Class action lawsuit filed on behalf of investors.Source: Music Business Worldwide
Related: StubHub accused of running a ‘bait and switch’ pricing scheme
This story was originally published by TheStreet on Nov 30, 2025, where it first appeared in the Entertainment section. Add TheStreet as a Preferred Source by clicking here.
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