Ever since Netflix (NASDAQ:NFLX) reported its surprisingly awful fourth-quarter results on Jan. 20, streaming stocks with any blemishes have been hammered by investors. FuboTV (NYSE:FUBO) is no exception. FUBO stock is down 20% in the four trading days since. It’s now officially a penny stock, trading around a 52-week low and the lowest point since June 2019.
As the streaming industry continues to shake out, FuboTV’s significant operating losses have dominated the discussion amongst investors despite generating considerable growth in the past three years.
Aggressive investors ought to consider buying its shares because FuboTV’s story has yet to be entirely written. If this were a baseball game, the company would be in the third inning with plenty of time to come back from the hole it’s in.
As recently as November, FUBO stock traded above $30. It’s down 88% from those November highs. It’s not been a good year for shareholders, and Netflix certainly didn’t help matters. However, it’s important to remember FuboTV finished the year with 1.13 million subscribers and record revenue of $638 million. Further, it expects to see sales of $1 billion in 2022.
The company reports Q1 2022 results on May 5 after the markets close. Its guidance calls for revenue of at least $232 million in the quarter. In addition to hitting $1 billion in sales, North American subscribers are expected to hit 1.5 million in 2022, up significantly from 1.03 million in the first quarter.
FuboTV has cumulative operating losses of $878 million over the past three years. Those aren’t sustainable. However, it’s important to note its 2021 operating loss of $359.4 million was 25% lower than that of 2020. Further, its operating expenses in 2021 were $998 million, or 156% of revenue. If it hits $1 billion in revenue in 2022, it will still lose money, but it should be considerably less than last year.
Here’s what executive chairman Edgar Bronfman Jr. had to say in its Q4 2021 press release:
“Our fourth quarter closes out an extraordinary year defined by delivering triple-digit year-over-year growth in total revenues, advertising revenues and subscriber growth all while continuing to expand adjusted contribution margin.”
In early April, I suggested FuboTV stock could return to the $20s if it can reignite sequential subscriber growth while continuing to scale its advertising business. But unfortunately, FUBO is not a stock you put in your retirement plan.
We’re about a week from FuboTV releasing its quarterly results. If you own its shares, I would look forward to hearing more about its advertising business and Fubo Sportsbook. They are the two difference makers.
All in all, FUBO stock is a buy — but only for aggressive investors.
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On the date of publication, Will Ashworth 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.
