StubHub's 35% Drop: RPM Capital's $7.3M Bet vs. CEO's Tax Withholding

The real signal isn't in the headlines about a 35% drop from the IPO price. It's in the filings. For the smart money, the move is clear: they are buying the dip. The standout bet comes from RPM Capital Partners, a firm that just made a concentrated, meaningful allocation to StubHub.

At the end of the fourth quarter, RPM Capital Partners initiated a new position, acquiring 535,850 shares worth about $7.25 million. That's not a rounding error. This stake represents 6.36% of RPM's reported U.S. equity assets as of December 31. For a single stock, that's a substantial commitment, especially for a fund that already has a concentrated portfolio. In fact, this StubHub position is one of just two reported holdings in the entire filing. The firm's top holding is Semrush, which accounts for over 90% of its assets. Adding StubHub as the sole other position signals a deliberate, selective expansion-not a broad market bet.

This is institutional accumulation at work. RPM Capital is putting a significant portion of its risk capital into a single stock that the market has punished. The move suggests the firm sees the current price as a disconnect from the underlying business fundamentals, which include solid revenue growth and improving leverage. This is the kind of concentrated bet that signals conviction, not noise.

Contrast that with the CEO's recent actions. While RPM Capital is building a whale wallet, the CEO's recent share withholding for tax payments shows no skin in the game. When the people running the company are selling to cover taxes, it creates a visible misalignment with the investors who are actually buying. The smart money is buying; the CEO is cashing out. That's the signal to watch.

CEO Skin in the Game: A Routine Withholding, Not a Sale

The smart money is buying, but what about the CEO? The recent headline about a 35% drop from the IPO price naturally draws attention to the founder's actions. However, the latest filing tells a different story-one of routine administrative mechanics, not a sale.

On January 13, 2026, CEO Eric Baker had 18,130 shares withheld by the company at $13.58 per share to cover his tax obligations. The key detail is in the footnote: this was not a market sale but a tax withholding connected to equity compensation. This is a standard transaction for executives who receive stock as part of their pay package. The company simply takes shares to cover the income tax bill when those shares vest.

So, does this mean the CEO is cashing out? Not at all. The withholding removed shares from his direct ownership, but it did not reduce his total skin in the game. After the transaction, Baker beneficially owned 12,255,513 Class A shares directly. That's a massive stake, and it doesn't include another 34,370 shares held indirectly through his family foundation. His total beneficial ownership remains substantial.

Analyst Sentiment: Wall Street's Divergence from Smart Money

The smart money is accumulating, but Wall Street's view is a study in cautious optimism. Analysts are forecasting a rise, but their price targets hover in a range that reflects deep skepticism about the company's current financials.

The consensus is bullish on the future. Wall Street analysts have an average 1-year price target of $24.18 for StubHub stock. That's a significant premium to the current price, with targets stretching from a low of $16 to a high of $45. This suggests a belief that the company's strong operational momentum-like the $2.4 billion in gross merchandise sales last quarter-will eventually translate into profits and justify a higher valuation.

Yet the market's current price tells a different story. As of late December, StubHub's P/E ratio was 0.00, reflecting a net loss. This isn't a valuation gap; it's a chasm. The stock trades at a multiple that implies the company is not yet profitable, which is a direct signal of market skepticism about its near-term earnings trajectory.

This divergence is the setup. The smart money, like RPM Capital, is betting that the turnaround is imminent and already priced in. They are buying the dip, focusing on the improving leverage and revenue growth. Wall Street, however, is still waiting for the bottom line to catch up to the top line. Their price targets are forward-looking, but the current valuation is backward-looking, anchored in the present loss. The smart money is taking a longer view; the analysts are still counting the cost.

Financial Reality vs. Market Skepticism

The market's skepticism is understandable, but it's looking past the company's improving financial reality. The stock's 35% drop from the IPO price is a reaction to near-term losses, not a reflection of the underlying operational health and balance sheet strength StubHub is building.

On the top line, the company is showing solid market momentum. For the latest quarter, StubHub reported $2.4 billion in gross merchandise sales, an 11% year-over-year increase. That's the kind of volume growth that fuels a platform business. Revenue itself was $468 million, up 8%. This operational momentum suggests the core marketplace is working, even as the company navigates a tough earnings cycle.

More importantly, the balance sheet has been fortified. The company significantly improved its financial flexibility by reducing net leverage to 3.9 times adjusted EBITDA after a $750 million debt reduction. That's a tangible step toward a stronger capital structure. For a company in a growth phase, this enhanced financial flexibility provides a runway to invest in its business without the immediate pressure of high debt service. It's a foundational upgrade that the market's current valuation, which prices in a net loss, isn't fully recognizing.

The key risk that could derail this setup is regulatory pressure. The entire secondary ticketing model faces scrutiny over resale markups. If regulators impose stricter rules on pricing or fees, it could directly impact StubHub's core revenue model and margins. This isn't a hypothetical-it's the fundamental vulnerability of the business. The stock's low valuation may be a preemptive discount for this regulatory overhang.

So, is the drop justified? The fundamentals tell a more nuanced story. The operational engine is still running, and the company is strengthening its financial position. The market is pricing in the present loss and future regulatory risk, which is a valid concern. But the smart money, like RPM Capital, is betting that the regulatory overhang is priced in and that the improving leverage and sales growth will eventually drive a turnaround. The divergence between Wall Street's bullish price targets and the current P/E of zero underscores this tension between present pain and future promise.

Catalysts and Risks: What to Watch for the Thesis

The smart money is in. RPM Capital is betting on a turnaround, but their thesis needs confirmation. The next few catalysts will show whether this institutional accumulation is a smart bet or a costly misread.

First, watch the company's next earnings report. That's the immediate test. The smart money is looking for signs that StubHub's strong operational momentum-like the $2.4 billion in gross merchandise sales last quarter-can finally begin to translate into margin improvement. RPM's confidence is built on underlying fundamentals, but the market needs to see the financials catch up. Any stumble in revenue growth or a widening of losses would directly challenge the bullish price targets and the rationale for buying the dip.

Second, monitor insider activity for any shift in alignment. The CEO's recent tax withholding was routine, but the pattern matters. For the smart money's bet to hold, the CEO's direct holdings should remain stable or increase. Any further selling by insiders, especially if it's not tied to a tax event, would signal a lack of skin in the game and a red flag for the new institutional bet. The current setup shows no such move, but it's the next filing that will confirm the CEO's continued alignment.

The key risk that could break the thesis is regulatory pressure. The entire secondary ticketing model faces scrutiny over resale markups. If regulators impose stricter rules on pricing or fees, it could directly impact StubHub's core revenue model and margins. This isn't a distant threat; it's the fundamental vulnerability of the business. The stock's low valuation may already be discounting this overhang, but a concrete regulatory action would be a major catalyst for a re-rating lower.

In short, the catalysts are clear: the next earnings report to see if growth is turning into profit, and continued monitoring of insider holdings for alignment. The risk is a regulatory blow to the business model. The smart money is watching these exact points.