Why Stubhub May Go Bankrupt Over The Next 12 Months

I think that companies like StubHub, Tickpick, and Vividseats have a high chance of going bankrupt over the next year. Their business model will implode if too many customers ask for returns.

What do you do when 90% of your customers want refunds at the same time? Just reverse all of the transactions and give them the cash back, right? 🤔

👉 This is not possible with Stubhub because, they already paid the cash to the resellers (while taking a 15% cut). So if they want to refund the customers… they only have 15% of the cash they originally had 😲.

It’s like this… Imagine you pay a pizza delivery guy a commission to deliver your pizza. If the customer wants a refund, you can refund them the cost of the pizza… but it would be impossible to give the customer the pizza delivery guy’s hourly wage and tips! That person has already been paid out. But in this case, the wage and tips represent the majority of the cash.

I’m no CFA, but someone tell me if I’m not understanding the cash flows here correctly…

Personally I love buying tickets from these websites. But I’m quite afraid my concert tickets to the Weekend I purchased may become worthless if the company becomes insolvent.

#strategy #tickets #businessmodel #concerts

Additional analysis here: https://www.ticketnews.com/2020/04/opinion-stubhubs-urgent-peril-and-the-industry-response/