Shares of sports-focused streaming service fuboTv (NYSE:FUBO) sold off after posting strong third-quarter results. The company experienced healthy growth in sales and subscribers during the quarter.
However, the streaming firm has to improve its profitability numbers, which is likely to happen over time as the platform expands its subscriber base further. Nevertheless, the company has shown great momentum and is likely to grow briskly, pushing FUBO stock to new heights.
FuboTV has been consistently growing at a triple-digit clip and reducing its loss ratio for the past few years. Moreover, the company’s massive opportunity in the online live sports betting and sports streaming realm could pay many dividends down the road.
Its stellar third-quarter earnings reaffirmed my bullish thesis on the stock. FuboTV’s strategic acquisitions and incredible performance during the quarter will result in an even faster growth in the future.
Third Quarter Earnings Review
FuboTV wrapped up another sensational quarter marked by strong business momentum. It reported a whopping 156% year-over-year growth in revenues to $156.7 million while advertising revenues improved 147% from the prior-year period to $18.6 million. On top of that, total subscribers grew 108% from the same period last year to 944,605.
Moreover, average revenue per user per month improved 10% on a year-over-year basis. Across every metric, the company results proved to be spectacular, which suggests that the company is still growing at a healthy pace.
Another positive for the company was the full-year guidance it reported in its earnings. Moreover, it raised its fourth-quarter guidance to $205 million to $210 million, with 1,070,000 subscribers representing 32% year-over-year growth.
Though these numbers are impressive, it does not include the benefits of Fubo Sportsbook acquisition. Hence, it can be assumed that even without acquisitions, the company’s business is exceptionally strong. With the addition of Fubo Sportsbook, the firm may see a big jump in sales and valuations.
Future Growth Opportunities for FUBO Stock
FuboTV’s future opportunities are enormous, and it has the potential to continue seeing healthy growth momentum for the foreseeable future. For instance, growth in its Sportsbook and global expansion can offset growth in its streaming services.
The sports betting market is colossal, and the market is expected to explode as states legalize online sports betting. FuboTV has some unique advantages over its peers as it offers live sports streaming content.
Hence, users can enjoy sports-related content on the platform and use the betting service simultaneously. Moreover, it could also convert its streaming-only users to betting ones. All in all, the holistic service which fuboTV provides is currently unmatched.
Furthermore, the company recently announced it would acquire two companies to aid its expansion and growth initiatives to dominate online sports streaming. The first company it acquired is Edisn.ai which it hopes would enhance the company’s AI-driven interactive experiences, personalization, and stability.
Improving the company’s AI capability is an apt move that will undoubtedly increase its entire operation’s efficiencies. Moreover, it also announced the acquisition of Molotov SAS for $190 million, which will aid the firm in expanding its services globally. Molotov is essentially an online streaming platform with $4 million monthly active users. This strategic acquisition is highly beneficial for the company in expanding its global footprint.
Bottomline On FUBO Stock
FuboTV offers a better product to its users than its peers and at a more attractive price point. A few more years of expanding its sales and subscriber base will turn the corner on profitability. The stock currently trades at below five times’ forward sales, making it one of the cheapest streaming stocks in the market. Hence, it’s best to scoop up FUBO stock after the recent earnings dip.
On the date of publication, Muslim Farooque 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.
