When fuboTV (NYSE: FUBO) first launched in 2015 as a TV streaming service, it marketed itself around live sports, then later branched out into other popular sports, and has since signed a number of contracts with major networks including ABC, NBC, and Fox News.
FuboTV licenses content from other providers and creates packages to sell to consumers in bundles. The pull for customers is that they receive live entertainment without the need for expensive cable. Similar to other streaming services, there are no contracts and users simply subscribe any month they wish.
The stock increased 180% in 2020, so if we were to go by just this it might look like a good momentum buy. As always though, it’s a good idea to analyze the company’s bull and bear case.
Bull Case for FuboTV
Despite many sporting events being canceled due to COVID-19, fuboTV still managed to grow its subscriber base by about 60% year-over-year (YoY). Moreover, the company expects this figure to continue to rise in 2021.
The company’s focus on sports is one that has raised concerns for potential shareholders as live sports is typically one of the primary reasons that many consumers resist cutting the cord in the first place. However, if fuboTV can attract those consumers with its services, the company could become the go-to sports streaming option.
The online sports gambling market is expected to reach $155 billion in the U.S. by 2024, meaning if done right, fuboTV has the potential to make much more revenue over the coming years.
Bear Case for FuboTV
Bears argue that fuboTV’s business model has been tried and tested many times and doesn’t produce a profit. There are also many competitors in the streaming space who provide pretty much the same service but have much higher subscription numbers. Hulu with Live TV has 4.1 million subscribers and YouTube TV has attracted 3 million paid viewers.
Critics also point out the possibility of fuboTV only experiencing such high growth because it is selling its services at a loss and that future price increases are inevitable, which may deter new subscribers.
FuboTV is also not alone in the sports betting field either, even though some investors seem to be pricing the stock as if it had zero competition. DraftKings and casinos which run their own sports betting services represent stiff competitors in the industry who each can leverage their brand at lower costs than fuboTV.
Investors need to remember that fuboTV does not create its own original content, but instead it buys traditional networks from major content companies to resell them in packages to customers. This gives the company very little control over their margins.
In November 2020, fuboTV delivered its strongest ever quarter when it exceeded guidance with solid growth in revenue, subscription, and engagement. FuboTV reported 455,000 subscribers, up 58% YoY and beating Wall Street’s predictions. Total revenue increased by 47% to $61.2 million. The average revenue per user, which is a key metric in the streaming sector, came in at $67.70 per month in the quarter, up 14% from the prior-year quarter.
So, is FuboTV stock a buy?
FuboTV is a momentum stock — one that investors buy because the price keeps going up, which in turn causes the stock to go up even higher. However, the fact remains that the company is still operating in an extremely competitive space with a tricky business model.
If the sports betting sector and subscriber growth continue to climb, the stock will be one to watch out for. But as of yet, there’s simply not enough evidence to prove this is a guaranteed profitable stock.
Is fuboTV publicly traded?
Yes, FuboTV is publicly traded. The company began trading on the NYSE in October 2020 under the ticker symbol “FUBO.”
What’s better Hulu or fuboTV?
When it comes to premium channels as add-ons, Hulu + Live TV is the obvious winner as it lets you add HBO Max, Cinemax, Showtime, and Starz. Of these channels, fuboTV only offers Showtime.
What company owns fuboTV?
In March 2020, FaceBank Group entered into a merger agreement with fuboTV. Upon closing, the combined company was named fuboTV and led by fuboTV CEO David Gandler.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Financial Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.