Sports-focused streaming service FuboTV (NYSE:FUBO) has been getting increased investor attention. FUBO stock started trading on the Big Board in October 2020, initially around $10.
FUBO shares ran past $20 in November, after announcing strong Q3 results that showed “Solid Growth in Revenue, Subscription and Engagement.”
Shareholders then enjoyed the increase all the way up to a high of $62.69 in late December when it popped 135% in just one week. The stock endured a heavy sell-off after this high, dropping to under $30 as quickly as it had run to $60. But since then, the share price has made a mild recovery, now around the $34 mark.
The New York-based company was set up in 2015 to stream mainly soccer, focusing just on the (international) soccer demand. But later in 2017 started to stream all sports focuses primarily in the sports sector, including the NFL, NBA, and MLS.
FuboTV has been referred to as the next Roku (NASDAQ:ROKU), which went from around $20 in September 2017 to the current share price of $460. We’ve also seen the growth of Netflix (NASDAQ:NFLX) and YouTube, owned by Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), as both introduced a new way to watch media.
Could FuboTV be the company that changes how sports is viewed? The recent media and investor attention it has received seems to indicate this possibility. Potential investors could consider buying the dips. Here’s why.
Sports Streaming and Betting
Since the start of the pandemic, FuboTV has benefited from the increased number of people at home and with spare time on their hands. It ended 2020 with over 550,000 paid subscribers, a 72% increase in the year. This growth does not look like it will be slowing down anytime soon as people view sports at an increasing rate.
Where FuboTV has really advanced in recent months is within its pursuit of integrating sports betting with the current streaming service. In January, it acquired a sportsbook platform and gaming company called Vigtory for an undisclosed amount. This deal is expected to close in the first quarter and be fully implemented by the end of 2021.
Following the acquisition, CEO of FuboTV David Gandler said, “The proposed acquisition of Vigtory will give FuboTV the technology to build a consumer-driven sports betting product and launch it before the end of this year.”
During February’s NYC Sports Betting Investor Summit, some presenters speculated the growth only would increase as the path is clear for all 50 states to legalize sports betting.
Statista estimates that, worldwide, the sports betting industry topped $203 billion last year. FuboTV setting up a strong system now that could greatly benefit the company as the market receives more demand.
The company is also in the process of raising $3.5 million, which won’t be due until 2026. This strong cash inflow will help the company pursue its long-term vision with new projects. Therefore if future quarterly reports show continued growth, we could easily see this stock continue to rise at a strong rate.
The Bottom Line on Fubo Stock
Investors in FUBO stock have enjoyed strong returns since October. In January, FuboTV had a short interest of 76%, indicating that Wall Street is split on this company. Short interest is a gauge of the extent to which a stock is being shorted. Those who short stock positions gain if the share price falls.
On the flipside, recent SC-13G submissions to the SEC reveal that some major names are buying large quantities of shares. Morgan Stanley (NYSE:MS) filed a 5.1% share acquisition, whilst Goldman Sachs (NYSE:GS) purchased 6.7%.
Vanguard also purchased 6.57% and Comcast (NASDAQ:CMCSA) recently announced they own 9.3%. That makes up a total of over 27.5% acquired by major companies in very recent weeks, indicating that the long side of this stock could ultimately be stronger than the shorts.
As a young company, shares in FUBO stock are likely to be volatile. However, buy-and-hold investors with a two- to three-year horizon could consider buying into the declines in the shares of the sports streaming service.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.