Is it time to load up on fuboTV (FUBO) stock? That very much depends on who you ask. A bull will point to a succession of estimate trouncing quarterly reports since the sports-focused streamer’s October 2020 public debut, with almost every important metric showing exceptional growth. However, a bear will counter that argument by pointing out the company is no closer to becoming a profitable entity with the losses mounting up and the company too small to battle it out against better funded rivals. As such, FUBO is ultimately doomed to fail.
Despite the outsized growth in the last quarter, the market baulked at the losses posted in Q3 and the reaction was a hard cold shoulder. Since the quarter’s results were announced, shares have retreated ~50%.
When looking at FUBO’s case, J.P. Morgan’s Anna Lizzul considers both the bull and bear arguments. The analyst highlights how its sports-centric appeal differentiates it from larger vMVPD (virtual multichannel video programming distributor) peers such as YouTube TV, Hulu and Sling TV. There’s also the anticipated windfall from advertisers’ pivot away from linear TV to streaming services. Lizzul anticipates that advertising ARPU will “continue to grow at +DD (double digit) percentages annually and will increase as a percent of total revenue to 15- 20% longer-term.” FUBO has also taken the first steps to incorporate wagering into its service which offers another monetization avenue.
On the other hand, Lizzul makes the case for the naysayers, echoing the line of thought which argues of “heightened competition,” the costs related to acquiring subscribers and the challenge of balancing subscriber costs vs. fees. Add in further losses from marketing spend and content costs which will likely “continue to increase, due to a lack of leverage in its negotiations with media giants such as Disney.” Moreover, there’s the risk of elevated churn based on sports seasonality, and at present, there’s the danger of covid further interrupting live sports programming.
So, back to the question posed at the top, then. And here, while Lizzul admits there are “some risks to the business model longer-term,” given the pullback since Q3’s earnings, the analyst believes “shares present an attractive entry point.”
Accordingly, Lizzul rates FUBO an Overweight (i.e. buy) along with a$28 price target. This figure suggests room for 57% growth from current levels.
Lizzul’s objective appears conservative when compared to her colleagues’ outlook. The average target stands at $43.71, implying investors will see returns of ~156% over the next year. (See fuboTV stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
