Reaction to eBay's StubHub purchase


It's been a couple of days and it's time to see how the Street reacted to eBay Inc.'s (NASDAQ:EBAY) recent purchase of StubHub Inc.

Before the purchase, when the announcement wasn't official yet, I said that this acquisition is a good one, taking care of competition and giving eBay a bigger market share of the ticket reselling business.

First, eBay share gained back 3.17% of their value yesterday, as investors obviously reacted positively. What about analysts?
  • Mary Meeker of Morgan Stanley expects the purchase to reaccelerate growth for the company. Meeker has an "Outperform" rating on EBAY and expects StubHub to help eBay's struggling tickets category whose growth dropped to 19% in the fourth quarter of 2006 from 31% a year earlier.
  • Robert S. Peck of Bear Stearns even thinks that with StubHub, eBay could become a "formidable competitor" to the largest online ticketing platform, Ticketmaster and its TicketExchange. Ticketmaster is owned by IAC/InterActiveCorp. (NASDAQ:IACI).
  • Jeetil Patel of Deutsche Bank who has a Hold rating on EBAY warns that the core business continues to struggle. He is more cautious.
  • Douglas Anmuth of Lehman Brothers believes the acquisition is a good fit strategically.
  • Justin Post of Merrill Lynch thinks that with StubHub, eBay will probably control 40% of the secondary ticket market.
So there you have it. While ticketing is a relatively small business for eBay overall, I think investors were simply happy to see a good and positive move on part of the company.

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