fuboTV stock: Benefiting from sports betting, connected TV and digital advertising – The Average Joe

    fuboTV stock: Benefiting from sports betting, connected TV and digital advertising

    Victor Lei — Head of Research

    June 15, 2021

    fubotv stock

    June 15, 2021

    fuboTV is a sports TV streaming platform with live sports, news and entertainment in the US/Europe market. 3 trends are driving the growth of fuboTV stock…

    Catch me up: Compared to other streaming providers, Fubo’s 590k subscribers are tiny compared to other streamers like Netflix (200m+), Disney+ (100m+) and even NBC’s Peacock (42m+). But Fubo offers more sports content than any other streamers.

    • Founded in 2015 with an initial focus on soccer streaming before expanding into other sports and TV content.
    • Went public in Oct 2020, but getting there wasn’t easy — the company nearly went bankrupt in 2019.
    • Struck a deal with Disney to carry ESPN — a major sports channel that rounds out Fubo’s sports offering.
    • Acquired exclusive streaming rights to Qatar’s World Cup 2022 Qualifiers

    Fubo is spending an enormous amount of money on content and now it’ll have to prove that it can grow subscribers.

    What about FuboTV stock performance? After its IPO, Fubo’s stock rose nearly 5x over 4 months. But growth stocks began crashing in Feb, and Fubo was down 65% by May.

    • But the stock began its recovery after reporting first-quarter results that surpassed expectations — defying concerns from critics.

    What’s happening in the industry? Sports have always been slow to move towards streaming. But in the first 5 months of 2021, several sports leagues announced major deals to bring their content to streaming platforms.

    Broadcasting rights with the NBA are expiring in the coming years and more streaming deals could be coming — which means: more sports are making their way to streaming.

    That gives Fubo more opportunity to load up its content to attract subscribers. For many sports fans, having access to specific sports is a dealbreaker when it comes to choosing a sports streaming platform.

    • According to Matthew Ball, former head of global strategy for Amazon Studios, most news entertainment platforms were built on enormous sports rights — i.e. getting the rights to stream NFL, NBA, MLB, or NHL.

    FuboTV stock opportunity

    Why now? Fubo is riding a wave of momentum and delivered an incredible 2021 1st quarter earnings:

    • Total sales grew 135%, advertising revenue grew 206% and subscribers increased 106%.
    • It was the first time FuboTV didn’t see a decline in subscribers (due to sports seasonality)
    • Raised its full-year 2021 sales and subscriber growth expectations.

    Very strong quarter all around. And thanks to the Feb growth stock correction, Fubo is trading at nearly half its peak price.

    What’s the upside? FuboTV stock has several growth opportunities ahead:

    • Higher advertising rates, which have consistently grown in the past few quarters.
    • Launch of its sports betting app expected at the end of 2021.
    • Continued advertising shift from traditional TV broadcasting to connected TV — an industry that’s seeing tremendous growth.

    Sports betting makes a lot of sense for Fubo. Sportsbooks like DraftKings and FanDuels pay big money to acquire customers. In Fubo’s case, having access to customers through their streaming platform would provide them with a big advantage over competitors.

    At a ~$4b valuation, FuboTV stock isn’t as expensive as other sports betting stocks and even other high-growth streaming platforms. Considering FuboTV is expected to make $520-530m in 2021 — double what its 2020 sales — its valuation is reasonable… If you can overlook its lack of profitability…

    What are the risks with FuboTV stock?

    The biggest controversy surrounding Fubo is its negative gross margins from its high licensing fees — making it highly unprofitable. Despite releasing stellar first-quarter results:

    • Fubo is burning a large amount of cash and will likely continue to as it negotiates licensing deals to build up its content library.
    • TV streaming is also highly competitive with several networks launching their own platforms in recent years.
    • Fubo is very early in its sports betting ambitions and its impact on the company isn’t known.

    Streaming is highly competitive and the vast number of streaming options could make it harder for Fubo to attract customers in the future. Unlike Netflix, which moved towards creating its own content, Fubo will always be at the mercy of high-cost sports content with its current sports focus. It’s also unlikely that we’ll see Fubo making a profit for years to come.

    Investors: For those with lower risk tolerance, this one isn’t likely for you. If Fubo can execute, the upside could be big given its current valuation and industry growth.

    • Can Fubo continue to fund its business? As long as momentum remains in the sports betting, streaming and digital advertising industry, FuboTV will have little trouble raising money to fund its growth.

    Recent Posts