fuboTV (NYSE:FUBO) has taken a big hit over the past month. But the big picture suggests shares could become an investment champ inside your portfolio. Let’s explore some of what’s happening off and on the FUBO stock chart, then offer a risk-adjusted buy determination aligned with those findings.
Just what the world needs: another streaming service to take the place of cable. Netflix (NASDAQ:NFLX). Apple (NASDAQ:AAPL). Amazon (NASDAQ:AMZN). Disney (NYSE:DIS). HBO Max. Add the monthly subscription fees of just those popular streaming video platforms and cutting the cord on an obnoxiously expensive cable bill is less than clear cut.
Now there’s fuboTV.
Despite the subscription cost, FUBO may look like an essential streaming service for many of us during and well after Covid-19 is in the rearview mirror. So, what is FUBO?
FUBO isn’t exactly new to the scene. The company was actually founded back in 2015. But shares only recently listed on the NYSE this past October. After a more focused pivot into live sports television, a key deal to bring Disney’s ESPN to its platform, and a pair of acquisitions to allow sports book operations beginning in 2021, FUBO has a lot of promise.
But this isn’t about a wait-and-see opportunity for fuboTV investors. FUBO is a buy today.
Fubo vs. Roku
As InvestorPlace’s Luke Lango tells it, FUBO is already demonstrating robust growth backed by the kind of subscriber scale needed to turn an eventual profit. Most recently, November’s third-quarter blowout has been improved with the recently-announced preliminary fourth-quarter numbers. The release shows accelerating subscriber growth from 58% to 72% and sales jumping form 71% to 80%. Nice, right?
That’s not all either. An analyst note out on Thursday from Barrington Research is quite upbeat on FUBO’s ability to monetize traffic at much higher levels than its competitors. That includes streaming hardware darling Roku (NASDAQ:ROKU), which captures less than one-third of fuboTV’s per user ad revenue.
Lastly, if you want our added two-cents on top of FUBO’s substantial per user $7.50 in ad revenue, there’s a rather modest $1.85 billion valuation and 8.5x sales multiple to consider. In a market where ROKU also fetches $55 billion on 34x sales, maybe fuboTV is more of a sure thing than longshot bet?
FUBO Stock Daily Price Chart
Source: Charts by TradingView
On the daily price chart FUBO stock also looks promising. A hard-hitting corrective move of 63% that unfolded in just seven trading sessions entering 2021 has turned into a solid-looking bottoming pattern since hitting a low on Jan. 4. After Thursday’s near-18% bullish counter punch courtesy of Barrington, FUBO’s shares have confirmed a bullish higher-low formation.
Technically, the pattern price action is backed by a band of price support from roughly $23-$36. The zone is comprised of FUBO’s lifetime 50% and 62% retracement levels and trend support. What’s more, stochastics has just bullishly crossed over in neutral territory for added confirmation for a FUBO buy decision.
Be warned, FUBO stock’s volatility isn’t for the faint of heart. Even when a stock position is sized appropriately, the risk may feel much larger than the actual capital at stake. For investors with the resources to purchase 100 shares or more, a fully-hedged stock collar is a solid alternative strategy to consider given its defined and reduced risk characteristics.
Moreover, with this spread’s ability to ride the trend and accumulate shares with greater authority on weakness, in our estimation, a collar today puts investors one sure-footed step closer to long-term profitability.
On the date of publication, Chris Tyler does not hold, directly or indirectly, positions in any securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.