I’m sure the steep drop in Fubo (NASDAQ:FUBO) stock concerned some investors. I believe though that sellers are exiting too hastily. The company continues its rapid growth as it scales its business. However, there has been a shift in attitude in the market away from high-growth names.
FUBO stock dropped sharply from a high of $34 to a low of $25 right after the earnings release. The stock has slowly headed down to its current share price of about $19. You would think given this steep decline the company had posted some sort of earnings disaster. The inverse is true though as Fubo grew revenues by 156%.
Valuation and earnings (or in most cases losses) now seem to be at the forefront of analysts’ minds. Fubo is not really in that stage of its life cycle just yet. I believe it’s premature to dump FUBO stock as management has been exceptional in executing its goals.
The long-term outlook for FUBO stock remains as bright as ever.
FuboTV Reaches an Important Milestone
FuboTV recently reached a significant milestone by registering 1 million total paid subscribers. This is an amazing achievement for the company and shows that its service offering is resonating well with consumers. The company’s customers had streamed 284 million hours of content during the quarter a record high for the company. This was an increase of 113% compared to the previous year.
According to Fubo CEO David Gandler, “fuboTV’s achievement of hitting the one million subscriber mark since the third quarter ended is an extraordinary milestone by any measure but particularly remarkable given the momentum of our business over six short years. To put this in perspective, as of the end of the second quarter 2020, we had approximately 286,000 subscribers. And, even at the one million subscriber mark, we believe we are still just scratching the surface of the massive opportunity ahead of us with 72.6 million subscribers still active on traditional pay television.”
I like seeing this type of momentum when investing in high-growth stocks. Fubo’s management is executing well on its vision and is just getting started.
Fubo Prepares for International Expansion
The company isn’t resting on its laurels as it has a keen eye on global expansion. Fubo announced the acquisition of Molotov SAS for $190 million. The purchase amount is to be paid in 85% equity and 15% cash. Molotov is France’s No. 1 live TV streaming company with operations in France, Burkina Faso, Ivory Coast, Senegal, Morocco, Cameroon, and soon the Democratic Republic of Congo.
This is an important step in Fubo’s global expansion strategy as Molotov has about 4 million monthly active users in France. Molotov’s content is centered around live and on-demand TV series, movies, documentaries, and kids’ content. This will allow Fubo to augment its sports-related content in those markets. This would now give the company a significant foothold in France and other French-speaking nations.
The other important asset that Fubo will be acquiring is Molotov’s localization technology. The Molotov streaming platform had been designed to be adaptable to new markets and languages. In theory, this would help facilitate quick and efficient product launches in new geographies. Now that Fubo owns this technology, I would expect the company to attempt to enter new markets in the near future.
Investor Takeaway on FUBO Stock
The sharp sell-off has created a buying opportunity for FUBO stock. While growth names have been punished harshly in recent weeks, now is the time to separate the wheat from the chaff. Fubo is a high-quality company with fantastic plans for the future.
I wouldn’t write off FUBO stock just yet.
On the date of publication, Joseph Nograles held a LONG position in FUBO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
