FuboTV’s Mounting Losses Temper Current Optimism Around Cable Alternative

It seems that everywhere investors look, the signs indicate that fuboTV (NYSE:FUBO) stock is headed up. It’s about time, as FUBO stock has lost 27.5% over the last six months.

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

The company has posted impressive numbers which do indeed indicate reason for optimism. What I’d like to note is that oftentimes hot stocks simply garner so much clout that it makes sense to step back. 

That isn’t to say that fuboTV is on fundamentally weak ground. It certainly doesn’t appear to be based on its growth. 

So, this article will first take note of optimism regarding the company’s growth because it has done well. But then it will point out some emerging questions which investors should consider moving forward. 

fuboTV’s Offering 

With the multiple ways to avoid traditional cable TV today, it can be difficult to keep track of what each streaming platform offers. 

Here’s how fuboTV executive chairman Edgar Bronfman Jr. characterized his firm’s offering:

“As the shift of viewing from traditional pay TV accelerates, our differentiation in the marketplace — sports-focused programming, a tech-first and data-driven user experience and the planned integration of wagering and interactivity — firmly positions the company strongly for long-term growth,” 

In short, what’s expected to fuel FUBO stock appreciation is premium content, interactivity and integrated wagering. Sounds interesting enough. It is, and results have been quite phenomenal from a growth perspective. That growth has led to strong optimism surrounding the shares.

Optimism is High 

Most pundits would characterize investor sentiment surrounding fuboTV as being positive. And it’s easy to see why so many like it. 

Back in the first quarter, the company posted $119.7 million in revenue. Those numbers were strong. It is easy to simply look back over the past few years’ results and see where the optimism stems from. 

In Q1 2019 the company recorded $28.6 million in revenues. That figure jumped to $51 million a year later. And then, in Q1 2021, fuboTV reported $119.7 million in revenue as mentioned above. 

At that time the company gave guidance that it expects to post revenues between $520 million-$530 million for the entire year of 2021. Analyst optimism runs similarly high. The eight analysts tracked by Yahoo! Finance anticipate on average that the company will hit $531.68 million in 2021 total revenues. 

That means in 2019 the firm reached $268.8 million in revenue, it may hit $530 million this year, and those same analysts believe it could hit $870 million in revenue in 2022. 

That’s all fine and good. But at some point the market cannot reward a growing company like fuboTV on top-line growth alone. And that raises a good question investors should consider.

Questions Remain 

The question investors should consider is around net losses, because fuboTV’s net losses aren’t encouraging. 

A look back at Q1 results tells a bit about that issue. The company has posted sequential Q1 net losses of $40.7 million, $66.6 million, and $70.2 million in 2019, 2020, and 2021, respectively. 

If we simply annualize that Q1 2021 loss we might reasonably expect the company to lose $280 million this year. 

There’s a lot of optimism around streaming platforms but investors have to at least remain cognizant of fundamental financial truths like this. My colleague Josh Enomoto recently raised an interesting question about fuboTV. With the $65 starter package, why are there so many non-sports offerings? 

“Why so pricey? In addition to sports channels, members get non-sports related content networks, like TLC, VH1, USA and a host of other channels. When you’re just interested in sports, you don’t want to pay for these extras, which will be a lingering challenge for FUBO stock.”

He goes on to note that he can get truly focused, single-sport streaming for a relatively cheaper price. It raises the prospect of increased focus which could erode fuboTV’s position moving forward. 

To be sure, FUBO stock is a favorite of many, but growth stocks often get over-hyped. That may be the case here… or not. Because the market is digesting most of the issues, including net losses and degree of focus now, I’d wait before investing.

On the date of publication, Alex Sirois 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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.


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