StubHub (STUB) faces uncertainty after reporting weak Q4 results and offers limited visibility into the value of its direct issuance business, with management failing to achieve expectations, Wedbush Securities said in a note Thursday.

The company is also vulnerable to regulatory risks for the industry and AI-driven disintermediation, analysts said.

The brokerage cut its estimates to reflect "heightened" uncertainty in the company's performance and now expects Q1 revenue of $428 million, down from prior estimate of $476 million, while gross merchandise value is now projected at $2.2 billion, versus $2.4 billion previously. Adjusted EBITDA for the quarter is now expected at $64 million, down from previous outlook of $96 million, according to the note.

For full-year 2026, Wedbush said it reduced its gross merchandise sales and adjusted EBITDA estimates by $2.5 billion and $340 million, respectively.

Investors need proof of durable growth in the core resale business and an inflection in the original issue market in favor of the new direct model to become constructive on StubHub, the brokerage said.

Wedbush downgraded the stock to neutral from outperform, and lowered its price target to $10 from $18.

Shares of StubHub were trading over 12% lower near midday Thursday.

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