Fubo (NYSE:FUBO) stock is too wild given how stable the concept of streaming has become. Netflix (NASDAQ:NFLX) did all the hard work and established the trend for the future. Disney (NYSE:DIS) picked up the baton and is expediting the pace forward. For that reason, FUBO stock will do well along with a bullish market.
It is no longer if, but rather when everyone will be streaming media content. We’ve already switched in my household and we are currently using YouTube-TV for it.
I would jump ship to Fubo in an instant if Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google ever gives me reason. Aggregating content and delivering it via streaming is a winning business. The growth in Fubo’s profit and loss statement supports that claim.
Meanwhile, the stock does not portray an appropriate level of confidence. It is frequently on shaky grounds. It came into 2021 with a massive wave of buying. Forty days in and FUBO stock had already rallied more than 110% and lost it all twice. Then things got worse as it followed the market into its lows in May.
Are you dizzy yet? It doesn’t stop there. After the May correction, the stock went on another 95% rally. Finally some stability came with the summer. Since July, it has been ping-ponging inside of an $8 sideways range. Once the price breaks out of either limits of it, it should carry forward in that direction.
FUBO Stock: Advantage Goes to the Bulls
Currently the bulls are in control and the stock is approaching $33 per share. Above that, the sellers would capitulate and the rally would accelerate for another $8. Shorter term, traders should wait for the breakout before chasing it. Over the long term, FUBO stock makes for a compelling bullish thesis. But trading the near-term battle lines makes for fun opportunities.
Chasing the rips is fun, but on bad stents, investors would do well to also buy dips. So far, it has followed the indices in general, so it will require them to continue being bullish. The bears on that front are also capitulating as they are at the edge of new highs. Nevertheless, there are still experts who argue that we deserve a correction. So far, the data doesn’t support that notion.
We have an ocean of cash in the U.S. economy, and we still have the central bank support. The taper process doesn’t end until the middle of next year at the earliest. This guarantees us quantitative easing until then, so the Federal Reserve is still our friend. Moreover, the White House is in full spending mode.
FUBO Stock Will Break Out of the Range
If FUBO TV dips into $24 per share, it would make for a good buy-the-dip opportunity. The options markets offer many strategies that would allow investors to be bullish there with protection. For example, on bad days I can sell a FUBO December put and collect credit for it. This position would require no money out-of-pocket and would leave maybe up to 20% buffer. Using options can be intimidating because of misconceptions of risk. They have a bad reputation for danger, but responsible use actually provides safety.
Because nothing has changed in its fundamentals. I am basically restating my overall bullish sentiment on the stock. In early August I wrote a note about the coming rebound. A quick 25% rally followed, but it was a sharp spike and didn’t last long.
Moreover, in that note I also pointed out areas of resistance and we are coming into them now. Therefore, the range I noted above is still in play until it dies. This might mean that there are sellers lurking here until the bulls take them out. Going long now or waiting until after the fact depends on the investor time frame.
On the date of publication, Nicolas Chahine 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.
Nicolas Chahine is the managing director of SellSpreads.com.
