FuboTV Stock Might Have Fallen Too Far Too Fast

FUBO stock - FuboTV Stock Might Have Fallen Too Far Too Fast

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FuboTV (NYSE:FUBO) cannot escape the Netflix (NASDAQ:NFLX) debacle. FUBO stock is now down 75% year-to-date. More importantly, since Netflix reported its disastrous subscriber results on April 19, FUBO stock is down over 28%. This is when Netflix reported that it actually lost 200,000 subscribers when it had previously forecast an increase in Q1 of 2.5 million to 4 million members. Moreover, Netflix said it expects in Q2 it will have a net loss of 2 million paid memberships, vs. gaining 1.5 million a year ago.

This represents a decline of almost 1% from Netflix’s 221.64 million global paid streaming members it posted in Q1. If Netflix’s current trends persist (such as slow acquisition and the near-term impact of price changes), the stock will keep tanking. This is having a “fallout effect” on FUBO stock.

FuboTV is also a paid membership streaming company, with a side reliance on online sports wagering. FuboTV released its full-year 2021 earnings on Feb. 23 as well as new guidance for this quarter Q1 2022. It reported a higher than expected revenue of $231 million. This exceeded its prior upgraded guidance of up to $220 million in revenue for Q4.

The company said that the Q1 subscriber base will grow from 1.1 million at the end of 2021 to a range of between 1.26 and 1.27 million. That represents an increase between 14% and 15% in Q1 alone. The midpoint rise is 1.268 million, or up 15.3%.

But now that forecast is up in the air? If the same forces that affected the Netflix growth debacle hit fuboTV, then the stock drop is seen as prescient. But will this really be the case?

Where This Leaves FUBO Stock

At it stands now, investors project that the company will make $1.11 billion in revenue this year. Given that the market value of FUBO stock is now $611 million, it trades for just 0.55 of its market value. That is much cheaper than NFLX stock for example. NFLX stock is still trading for 2.6 times sales. Its market value of $87 billion is 2.58 times greater than analysts’ forecasts of $32.4 billion for 2022.

This implies that if fuboTV reports earnings and membership numbers for Q1 that are not completely disastrous as Netflix’s were, the stock could actually rise. This is because it already reflects a lot of really bad news at its price-to-sales (P/S) multiple of almost one-half. That will seem like too much if its numbers turn out to be better than expected. And if not, the stock already reflects most of the downside.

On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) 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.

Mark Hake writes about personal finance on mrhake.medium.com, Newsbreak.com and Beehiiv.com.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/fubo-stock-why-fubotv-shares-might-have-fallen-too-far-too-fast/.

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