FuboTV (NYSE:FUBO) stock dropped slightly following the announcement of mixed results. Having reported revenue ahead of their previous estimates, they are now expecting that the next quarter will be slower.
It could not have come at a worse time for FUBO stock. The stocks of fast-growing companies are still struggling, despite a relatively good month of January.
In 2022, many of these companies were trading at high valuations. However, this didn’t make them any less expensive to buy than when they came into the year. There had to be some “bad” days, which came from rising rates and expectations that the Fed would hike to control inflation.
The opinion on growth stocks isn’t helped by the Russia-Ukraine situation, a major factor in the decline of growth stocks.
The downside of a crisis is that it stops people from making investments. However, every difficult situation is an opportunity to grow. Therefore, growth companies like FUBO stock present an enticing opportunity due to the long-term prospects at play with this one.
FuboTV is a streaming television service that offers live sports and entertainment programming. The company launched in January 2015 and has since expanded exponentially by concentrating on a niche.
The company’s goal is to provide a live TV experience that people can enjoy through their laptops, phones or other mobile devices. They offer a variety of channels, including entertainment, news, sports and kids programming.
The streaming company is continuously growing, making it a stronger competitor than ever before. If there is one company that stands apart in a sea of streaming giants, it is this one.
FUBO Stock and an Innovative Operating Model
FuboTV has been expanding rapidly over the last few years. Sports is the focus of the service, with a lot of coverage for all major leagues and competitions. Rivals include Disney’s (NYSE:DIS) Hulu and YouTube TV.
The new FuboTV streaming service now offers the ESPN channel. ESPN is one of the largest sports networks in the world, so this is a huge get for them and their subscription-based streaming service.
FuboTV is a smaller player in the streaming market, but their focus on live sports has helped them build a loyal customer base. FuboTV closed out the year with 1.13 million paid subscribers after adding 185k in Q4.
The data-driven approach allows the company to understand what customers want to watch and what they are not interested in. In addition to this, it also gives insights into shows that people are already watching.
Therefore, they can remove those aspects of the programming that fail to mark. This leads to a reduced churn rate (the rate users stop using your service). It’s a similar model Netflix (NASDAQ:NFLX) uses, but NFLX is not trying to corner the sports viewing market.
Active Users Are Up
FuboTV is not reliant on its streaming product alone for growth and profit. The company is always looking for new ways to make money.
They generate advertising revenue, but it’s less than the company makes from the user data it collects. FuboTV has integrated a sports-betting platform into its TV service. This allows viewers to place bets in real-time for games they’re already watching live.
The company reported a fourth-quarter net loss of $112.0 million, or $0.76 a share, and this was an improvement on the year-ago quarter, which saw them suffer a $195.3 million loss or $2.47 per share.
FuboTV has announced that it reached 1.13 million total subscribers last year, with 185,000 new subscribers during the previous quarter. They had 404 million hours of content streamed through their service during the same time frame.
Looking ahead, the company expects subscriber growth to slow down in the first quarter. It expects to see 1.028-1.033 million subscribers in North America as of Q1 and 1.50-1.51 million subscribers by the end of the current fiscal year.
For the rest of the world segment, the company projects 235,000 to 240,000 subscribers for the first quarter and 270,000 to 280,000 by 2022. Analysts were expecting higher numbers. The mixed outlook led to FUBO stock falling.
But FuboTV CEO David Gandler expects the company to grow over the next five years and get anywhere from 3 – 5 million subscribers.
The Bottom Line on FUBO Stock
FuboTV has been doing a lot of advertising lately, and it seems like they would benefit a lot from their campaign. Since this has been introduced, the number of people watching fuboTV has increased significantly.
FuboTV is unlikely to be a major rival for Netflix, but it doesn’t need to be for investors to reap the rewards.
The Q4 numbers show that the company is on a positive trend. The company believes the first quarter is typically “slower” or has less activity than the fourth. However, fuboTV continues to trim losses at a healthy rate. Don’t let external factors and a pessimistic outlook deter you from investing in this one.
Therefore, considering subscriber growth, a unique niche, and a data-driven approach, FUBO stock is a buy.
On the publication date, Faizan Farooque did not hold (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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.