The World Cup was supposed to bring a windfall for StubHub. Instead it wiped out its quarterly profit and left the ticket reseller battling customers angry about fraudulent tickets and slow refunds.
Shares tumbled 16% in Thursday morning trading after the company reported quarterly expenses jumped 37%, more than offsetting a 33% surge in revenue for the quarter ended June 30.
Chief Executive Eric Baker acknowledged the problems that some buyers had with World Cup tickets. "As fans ourselves, we understand the disappointment when these issues occur," he said in response to analyst questions late Wednesday. "Our marketplace only works when fans attend an event."
Baker pointed to FIFA's mobile ticketing app as a challenge for the company. He described it as a system "put up by the event organizer that was sort of just a bespoke thing for this tournament, not anything that anybody would typically rely on," and said it "added an additional layer of complexity" on top of the 75 matches StubHub handled in roughly two weeks.
The Wall Street Journal reported this week that StubHub is facing a flood of complaints from World Cup fans who bought tickets months in advance, only to be stranded hours before the games. StubHub has blamed World Cup disruptions on what it said were obstacles with FIFA's mobile-ticket app.
The Journal found that ticketing problems extended beyond the tournament. More than 50 StubHub buyers said in interviews they were denied entry for events despite paying for valid tickets, were sent replacements worse than what they had bought, or spent months fighting StubHub for refunds it had already promised. For many, resolution came only after they hired lawyers or complained in the press.
Baker said the overwhelming majority of StubHub buyers experienced no problems with their ticket orders during the World Cup, but acknowledged "there was a small subset of fans who didn't have the experience they wanted (and) had to get a refund."
"That's unacceptable to us. We work every day to try and eliminate that. Even one refund...is one too many," said Baker.
With Thursday's sharp drop, the stock is now down nearly 70% from the price the company fetched in its initial public offering less than a year ago. The company sold shares to the public at $23.50 last September.
The results reported late Wednesday included a loss attributable to common stockholders of around $40,000, or 0 cents a share. Analysts polled by FactSet had projected a profit of 11 cents a share.