FuboTV gambles its future on interactive sports betting app - The Average Joe

    FuboTV gambles its future on interactive sports betting app

    Victor Lei — Head of Research

    October 20, 2021

    fubotv

    October 20, 2021

    September is known for many things — back to school, the stock market’s worst month, plus being TV streaming providers’ strongest month.

    Streaming service sales spike during September — along with the start of the NFL season — with one platform capturing the majority of that growth…

    Sports slowly move towards streaming

    Founded in 2015, FuboTV is a live TV streaming service that bundles different channels — with a focus on sports.

    • Rapid growth to 700K subscribers, expecting 900K by the end of 2021.
    • Stock is up 22% in 2021 — with analysts concerned about competition and its habit of burning cash.

    Why so unprofitable? Licensing content is expensive, even more so when it comes to sports — and to make its model work, Fubo charges a subscription fee and displays ads.

    Fubo is still a fraction of the size of other live TV streaming services — Youtube TV (3M+ subs) and Sling TV (2.4M subs) — and worse news, Youtube TV’s growth is already flattening. Don’t forget Fubo’s other problems…

    • The market for live TV is much smaller than non-live streaming services like Netflix/Disney+.
    • At $65 per month, Fubo’s streaming service isn’t cheap — with sports as its main appeal.

    But here’s where Fubo gets interesting…

    Fubo’s best shot at becoming profitable and differentiating itself from competitors is its interactive sports betting service — which is expected to launch by the end of 2021:

    • Partnered with sports organizations including NASCAR, NFL’s New York Jets and NBA’s Cleveland Cavaliers.
    • Received licenses to operate its sportsbook in several states including Arizona and Iowa.

    The upside remains in its sports betting product — which is an important revenue source and without it, analysts are skeptical it can become profitable.

    The Joe’s speculation: If Fubo’s sports betting platform becomes a success, the company could be a great acquisition for DraftKings or Penn — who are both in an acquisitive mode.

    Investors: All bets on sports betting

    Fubo’s CEO is betting live TV streaming services can hit 40-50M subscribers in the next 5 years — and that Fubo will capture 10% of it — getting it to 5M subscribers. But even at those numbers, profitability likely won’t come without making its sports betting product work.

    This week, research firm, Bernstein, released a bullish call on several sports betting names including Penn National Gaming (NASDAQ:PENN) and Fubo — as sports betting continues to move online in several states.

    Receive stock market opportunities and news straight in your inbox

    Join 25,000+ investors and save 1,000+ hours on stock market research with our free newsletters.

    Recent Posts