fuboTV (NYSE:FUBO) Stock: Is the Sports Streaming Company a Buy?

Tuesday, November 3, 2020 | Sean Sechler
fuboTV (NYSE:FUBO) Stock: Is the Sports Streaming Company a Buy?

The ability to enjoy digital media on streaming platforms has completely changed the way that the world consumes entertainment. More and more people are cutting their cable cords and electing to pay for only the content that interests them. With companies like Netflix, Disney, and Amazon all offering streaming platforms that bring your favorite programs to the comfort of your home in a matter of seconds, it’s safe to say that the streaming wars are in full swing. It’s also interesting to note that as of now, sports content doesn’t have a go-to platform for fans to turn on. That means the king of sports streaming has yet to be crowned.

One thing to know about sports fans is that they are loyal and will go to great lengths to watch their favorite games live. That’s what makes fuboTV (NYSE:FUBO) such an interesting company for investors to monitor. It’s a sports-first live television streaming platform that could end up being a major success in the coming years. fuboTV filed for an upsized public offering of 18.3 million shares back in October at $10 per share and the stock is up over 37% since then. While it’s a company with intriguing growth prospects as one of the only streaming TV sports pure-plays, is fuboTV stock a buy? Let’s take a deeper look at the company below and whether or not it’s worth adding to your portfolio at this time.

The Streaming Platform for Sports Fans

We know how popular streaming platforms were before the pandemic, and it seems that even more people are opting to cut their cable now as many are staying home and practicing social distancing. The problem for cord-cutters is that getting rid of cable essentially means saying goodbye to live sports. While some existing platforms offer sports programming, it can be difficult to find the games you are looking for due to licensing agreements. That’s part of the reason why fuboTV has been seeing strong subscriber growth. With fuboTV, sports fans can get 43 of the top 50 ranked sports channels with a subscription to its platform.

The company offers a package of over 100 channels at a subscription price of $59.99 per month, which is a lower cost than many of the cable TV packages that offer sports. The recurring revenue for the company is attractive for investors and fuboTV is also seeing strong growth in its advertising revenue. There’s also the possibility of additional revenue opportunities for fuboTV if the online sports betting market takes off. As of June, the company reported over 286,000 paid subscribers and that number will likely increase as long as the company can continue offering so many different channels. While the company might run into problems in the future thanks to the high costs of sports content, for now, it’s likely the best streaming platform for sports fans.

Solid Top-Line Growth

There’s a lot to like about fuboTV’s top-line growth, as the company saw revenue of $146.5 million in 2019 which accounted for a 96% year-over-year increase. Advertising revenue in 2019 also grew by 201% year-over-year to $12.5 million. While 2019 was a strong year for the company, 2020 is going even better. Revenues in Q2 were $44.2 million which was an increase of 53% year-over-year. This growth was largely driven by a growing number of paid subscribers, as subscription revenue increased 51% year-over-year.

fuboTV also recently increased its Q3 subscriber guidance, as it now expects Q3 paid subscribers to reach 370,000-380,000. It appears that the company’s management is confident in its ability to execute for the remainder of the year, as fuboTV provided strong FY 2020 and FY 2021 revenue guidance back in September. The company anticipates year-over-year revenue growth of 50% for FY 2020 and 82% in FY 2021. While there is risk here related to the pandemic and whether or not professional sports leagues can safely continue, things have gone smoothly for major leagues like the NFL, NBA, and MLB thus far.

Is fuboTV a Buy?

fuboTV is aiming to offer live sports streaming to customers at a lower cost than cable and has been able to capitalize on the mass shift in consumer behavior towards streaming platforms thus far. With strong top-line growth and several analyst upgrades this week, it is a stock worth watching going forward. The company has also signed a distribution agreement with Disney to provide news, sports, and entertainment on the fuboTV platform, which might be a sign of bigger things to come for the company in terms of partnerships.

There are plenty of positive developments with fuboTV as it aims to be the leader in streaming sports. However, investors might want to wait for the stock to pull back closer to its IPO price of $10 before adding shares at this time. Keep in mind that the company currently has 9.92 million shares for sale in a secondary offering that could impact the share price during the short term.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
fuboTV (FUBO)1.5$17.24flatN/A-1.28Buy$42.88
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