FUBO Stock: The Good, The Bad and The Ugly for FuboTV
Looking at your growth portfolio has been painful in 2022 so far. But, in the past week, growth stocks are perking up again with investors shopping for deals. After slipping 90% from its highs of $62 per share, FUBO stock is bouncing back as the company gains momentum.
Although the company continues growing, FuboTV (NYSE: FUBO) has fallen out of investor favor. To be fair, a large part of the selloff is thanks to a broader market rotation.
Companies with high valuations and no profits are getting hit the hardest as investors look to reduce risk. In other words, FUBO stock fits the description perfectly. Yet FuboTV is still growing quickly while improving fundamentally.
Is this the turning point for FUBO stock? Keep reading to learn the good, the bad and the ugly for FuboTV.
The Good With FUBO Stock
If you look at Fubo’s stock chart, it seems like the company is going out of business. Yet this is not the case. In fact, the company continues adding subscribers while converting it to new revenue.
Furthermore, FuboTV is in a growing niche focusing on sports streaming content. Billions of dollars are spent on sports every year.
In September, I wrote about FuboTV stock and the big opportunity it had ahead of it. Furthermore, I talked about how if the company’s growth were to slow, it could pressure FUBO stock to the downside.
Although growth has slowed some, the company is still achieving impressive numbers. For example, look at the revenue breakdown for the past four quarters compared to 2020.
- Q1 2021: $119M, up 135%
- Q2 2021: $131M, up 196%
- Q3 2021: $156M, up 156%
- Q4 2021: $231M, up 119%
As you can see, Fubo is still achieving impressive top-line growth. Though the YOY change may be slowing, the revenue continues climbing higher. Another key thing to note is the acquisition of Molotov, France’s most popular TV streaming firm, contributing $1 million in Q4.
Moreover, the sports streaming app keeps attracting new user’s, closing out the year with over 1M total paying subscribers in 2021. At the same time, more users equal higher ad revenue. In Q4, total ad revenue climbed another 98%.
And lastly, Fubo is moving into the sports betting industry with the launch of its Fubo Sportsbook rolling out this year.
All of this sounds great, then why is FUBO stock down 90% from its highs? For one thing, the company is still not profitable. In today’s market, unprofitable companies seem to be the last thing on investors’ minds.
Despite the incredible growth Fubo is achieving, the losses are widening. Though revenue is climbing, the company is losing more money by the quarter.
- Q1 2021: ($70M)
- Q2 2021: ($95M)
- Q3 2021: ($105M)
- Q4 2021: ($111M)
The widening losses could be a major reason why investors are staying away from FUBO stock thus far. Even though the company is adding new subscribers, it’s costing them.
For example, in the 4th quarter, subscriber-related expenses totaled $216M while total revenue reached $231M. If Fubo cannot cut some of these costs and boost margins, it will be a tough road.
In light of this, the company is cutting costs in other areas. As a percentage of revenue, total expenses fell from 187% last year to 147%. Though this is still not great, it’s an improvement.
To make matters worse, Fubo faces heavy competition in the industry as the competition fights for its share. Though Fubo has a niche in sports content, how many services are users willing to pay for?
- Netflix (Nasdaq: NFLX)
- Amazon Prime Video (Nasdaq: AMZN)
- Disney + (NYSE: DIS)
- Paramount + (Nasdaq: PARA)
Even if you want to include the next three, Hulu, HBO Max and Apple +, there doesn’t seem to be room for FuboTV. Being a “non-essential” streaming service, Fubo will face an uphill battle.
With this in mind, this could be a major reason why they are reaching into other industries such as sports betting for additional support. Being in a niche like sports can be a challenge, with industry giants like Disney’s ESPN and Paramount (CBS) having dominant control over partnerships.
Can Fubo find its place in the crowded industry? Not only that but can they profit from it? This will be the question as we advance.
FUBO Stock Analysis
Considering everything, FUBO stock is near its lowest value ever. Yet the company had an impressive year of growth. Investors are dumping growth stocks in favor of value while the market is processing the Federal Reserve (Fed) changing its intentions for the economy.
During the pandemic, the Fed slashed interest rates, and as a result, growth thrived. Now consumers are paying more as inflation hits its highest since 1981, according to the Consumer Price Index (CPI).
Although you might not think inflation has a lot to do with Fubo, it can deter individuals from spending on additional services. After bouncing from its lows of $6 a share, FUBO stock is looking to find support above $7.
Furthermore, volume is starting to pick up again after falling dormant for several months. Does this mean Fubo is breaking out of its downtrend?
We could see investor sentiment change if strong volume continues flowing into FUBO while lifting the share price. After losing close to three-quarters of its value, investors may see the stock as a bargain at these levels.
FUBO Stock Forecast: Where Do We Go From Here
No matter how you look at it, investing in FUBO stock is still a risk. But if you are looking for a higher risk, higher reward situation, it may be worth considering.
At close to 90% off its highs, the risk to reward is more in your favor than ever. The growth is still intact, and the company is possibly eyeing profits. Another key thing to consider is will they get bought out? At these levels, industry giants may consider them a takeover target.
At the same time, the company is expecting revenue to reach upwards of $1.9B. Will they be able to convert this to a profit? If so, these prices will seem like a steal for FUBO stock.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.