- FuboTV (FUBO) cannot find support.
- FUBO stock is reaching abyss levels that could be interesting to some, but with some important caveats.
- Placing upside, wild card bets could make speculative sense soon.
In the past five years we’ve had many disruptive technologies that have changed lives for ever. How we consume media is one of those areas that will never be the same. The collective has spoken and they want to stream everything from now on. Netflix (NASDAQ:NFLX) should take most of the credit for making this trend mainstream. FuboTV (NYSE:FUBO) is a participant in the propagation of the new norm. Sadly FUBO stock has fallen into an abyss and it is pitch black down there. Investing in it now only makes sense from a speculative perspective.
The cord-cutting process is still ongoing and FUBO is helping the transition along. It is walking through the door that Netflix opened. And FUBO is one of dozens trying to reap the benefits. However, the issue is that FUBO stock is not feeling it. Investors in it have lost 95% of their money since the 2020 highs. Even down at these levels there are no signs of abatement.
On paper, this is not due to bad management. Its financial metrics are still improving at least from the growth perspective. Last year, revenues grew three fold behind heavy spending. And therein lies the problem for the stock this year. Currently Wall Street has no risk appetite for high growth and high spend companies. This is a large group of stocks that includes Palantir (NYSE:PLTR) and Twilio (NYSE:TWLO) to name two. Most have great businesses with potentially bright futures. But their open checkbook policies make them toxic to investors.
| Ticker | Company | Current Price |
| FUBO | FuboTV | $4.02 |
FUBO Stock Offers High Risk and High Reward
FUBO’s business is not up to par with these last two, but it finds itself inside the same bearish vortex. Companies who are disrupting and innovating must spend to achieve their goals. Investors now favor more stable defensive stocks. Taking bullish positions in FUBO must be as a speculative bet. I shouldn’t expect much, and I must not risk too much money on it.
The 2020 rocket ride came on the back of the popularity of ARK Invest. Arguably now Wall Street is seeking to punish the sins of the pandemic rally. That froth is almost all out, but there could be a bit more to go this week. So, in addition to its own woes, FUBO stock has outside risk from markets. Even Netflix stock recently lost 70% of its value since November. Half of this came in April. Clearly investors are ruthless; therefore, I don’t blame FUBO traders for having shaky conviction.
I tried investing in it a few times before using logic, but the results were very frustrating. Trying to catch this falling knife is undoubtedly risky business. In the end, Wall Street may come around to liking FUBO but there are no obvious signs yet. For now traders must admit that they are taking unusual and illogical risk.
Management has a tall order to bring investors back to its stock. I am not certain that these efforts are likely to be quick. Therefore, important ingredients will be patience and moderation. Those who take a position all at once are opting into swinging for the fences in one shot. I favor either waiting it out until the bottom is clear, or just nibbling here at best.
Assuming this is a bottom is wrong since there is no evidence of a trough yet. There are no visible attempts at consolidation. That’s why the chart looks like it’s a stairway from heaven to hell. Not fighting the tape is a better mindset at this stage. Investors should go with the flow until the tide changes.
On the date of publication, Nicolas Chahine 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.
