Is FuboTV Really a $200 Stock?

In early February, InvestorPlace’s Luke Lango suggested that FuboTV (NYSE:FUBO) was headed to $200. In mid-April, Lango reiterated his assertion about FUBO stock.

Flat-screen TV set displaying logo of FuboTV, an American streaming television service that focuses primarily on channels that distribute live sports
Source: monticello / Shutterstock.com

It’s one thing for a bunch of Reddit yahoos to be calling for a $200 share price. But, heck, some of them still believe Castor Maritime (NASDAQ:CTRM) is headed to the moon

However, it’s another for InvestorPlace’s biggest innovation investor to make such a prediction. 

I don’t know if it’s a $200 stock, but I do know that it’s got a significantly higher chance of hitting $200 than CTRM has of hitting $17, the same appreciation that FUBO needs to get to $200 from $30 as I write this.  

Anyway, as I stated in May, the speculative investor should be interested in FUBO stock despite dropping 13% over the past month. 

“When FuboTV reports its Q1 2021 results, I would look to see that it’s continuing to grow its hours watched, the number of paid subscribers, and of course, hours watched per paid subscriber. If all three of those are positive, I don’t see why a speculative investor wouldn’t remain very interested in FUBO stock,” I wrote on May 10.

So, let’s take a look at those metrics. It ought to tell us whether it’s got the stuff to hit $200 in the future.

FUBO Stock and Its Key Metrics

FuboTV reported its Q1 2021 results the day after my May article. Here’s how things shook out. 

On the subscriber front, it reported 590,000, up 105% from Q1 2020. Content hours streamed was 228 million, up 113% over a year earlier. The hours watched per paid subscriber was 386.44 [228 million divided by 590,000]. That’s up from 372.82 in Q1 2020, 228.57 in Q1 2019, and 375.91 in Q4 2020.

So, the year-over-year and sequential growth in hours watched per paid subscriber was 3.7% and 2.8%, respectively. While the single-digit increases might not seem like a lot, it was enough to increase revenue by 135% YOY and 13.9% sequentially. Those are both excellent numbers when multiplied by more than half a million subscribers.

Also, consider that it’s just beginning to generate advertising revenue. In Q1 2021, it had $12.6 million in ad revenue, 206% higher than a year earlier and accounting for 11% of its overall revenue of $119.7 million, up from 8% in Q1 2020.

Don’t be concerned that its ad revenue in the first quarter was down from the fourth quarter. But, again, it’s a seasonal thing. The important thing is that all the metrics are moving in the right direction. 

As I said in my May article, like Roku (NASDAQ:ROKU), the numbers don’t lie. As long as they keep moving higher, so too will FUBO stock.

$200’s a Bit Rich

It does seem a bit rich. At least in the near term.

Over the past three years, Roku stock has had an annualized total return of 115.0%. Let’s assume FUBO does the same. It would take 2.5 years to get to $200. That puts us into the end of 2023 or early 2024. 

To me, that seems like a possibility. But, of course, a whole lot has to go right, including, but not limited to, an ongoing doubling of subscribers, considerable growth from advertising, and generating an operating profit. 

I would think that investors would be willing to give it a $200 valuation ($28.1 billion market capitalization based on 140.5 million shares outstanding) if it got to 1.2 million subscribers, annual ad revenue of $200 million or 20% of overall revenue, and a $100 million operating profit or 10% margin. 

Right now, it’s on track to hit 840,000 subscribers by the end of 2021, full-year revenue of $525 million (ad revenue approximately 11% or $58 million), and an operating loss upward of $260 million. 

So, it’s got a long way to go before it hits $200.

The Bottom Line

InvestorPlace’s Dana Blankenhorn recently discussed FuboTV’s move into sports betting. If your business is at all related to sports — it has a ton of sports programming — you have an almost fiduciary responsibility to your shareholders to enter the fray.

If FuboTV didn’t, I would be a lot more reluctant to recommend its stock. And that’s despite the fact I believe DraftKings (NASDAQ:DKNG) is THE sports betting stock to own for the long haul.  

As Blankenhorn points out, the simple fact is that FuboTV will become too valuable to a larger media organization and will get taken out at some point in the future. 

Will it be at $200? That I can’t tell you. But I do know it will be for a lot more than $30. 

Govern yourself accordingly.    

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


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