- FuboTV (FUBO) shares have been sacked in an unforgiving market environment.
- FUBO stock is in good position to continue growing its dominant niche and turn profitable.
- A multi-bagger opportunity exists in FUBO shares for buyers without requiring a Hail Mary.
Streaming sports-first upstart FuboTV (NYSE:FUBO) didn’t fumble the proverbial ball with this month’s earnings results. If anything it was a modest misstep. But that didn’t stop investors from sacking shares to fresh all-time-lows either.
A backdrop of scorching inflation, supply chain snarls and aggressive central bank monetary policy have raised fears of a global recession. And for stock traders, anything less than perfect announced this earnings season has allowed already damaged stock goods to be harmed further. And FuboTV’s earnings shortfall is a prime example of the punishing behavior.
Not only were shares stripped of 21% in the report’s aftermath, but the bearish price action also marked new all-time-lows, a loss of 79% on the year, as well as extending FUBO’s correction to nearly 94% from its December 2020 peak. Today though, let’s look at why shares are actually in strong position to gain yardage and provide nice-size profits to FUBO stock buyers or investors using a bull call spread.
FuboTV’s Bullishly Mixed Earnings
Sales growth of 98%. Total paid subscribers up 81% and topping one million for the first time ever during the quarter. Ad revenues up 81%. Record Q1 revenues of $236.7 million. If it sounds awful, you’re apparently not alone.
Despite revealing more than its share of enviable statistics on May 5, Wall Street pounded FUBO stock in the wake of its earnings report. FUBO also announced it finished the quarter with $456 million in cash and a sufficient bank roll to take the outfit into 2024. And looking out just a bit further, management said it expects positive cash flow and adjusted EBITDA during 2025.
To be fair, the report wasn’t perfect. Among other features, losses came in wider-than-forecast and larger than 2021’s first quarter. Pressure on Fubo’s contribution margin due to slower-than-forecast ad growth also helped bears tackle shares.
Marginally below views full-year sales guidance of $1.02 billion to $1.03 billion and North American subscribership of 1.47 million versus 1.5 million added further salt to the wound.
Where Bulls Can Take Possession of FUBO Stock
Source: Charts by TradingView
The MVP for buyers of FUBO stock is part of its “secondary” on the price chart. I’m referring to the weekly stochastics indicator, which has had its share of success signaling in front of larger rallies in FUBO since the pandemic began in 2020.
Over the past two-plus years, any significant gain in the FUBO share price has occurred alongside a bullish alignment from stochastics. That’s not to say the crossover is foolproof. It’s not and the last couple of signals (highlighted in yellow) quickly failed with no chance to profit on this time frame.
Still, a fresh alignment in oversold territory just triggered last week. History has proven kind to buyers of this setup. Further, coupled with a higher and above average volume doji candlestick formation, the chance for a bottom and a more meaningful rally to emerge appears attractive.
Buying FUBO Stock
Today’s FUBO stock offers the chance to buy a market leader and growth company while an overly fearful Wall Street and bearish short interest of around 20% weigh on shares. And with a small-cap valuation of just $650 million and given the massive share decline since 2020’s all-time-high, FUBO could turn into a huge multi-bagger without even needing to get anywhere close to those share levels.
With the weekly chart’s doji sporting stock risk of 92 cents, a technical-based and managed profit double would be available if shares trade above $3.67 for a pattern buy signal, then proceed to rally and cross back above FUBO stock’s Covid-19 bottom of $5 by about 10% to $5.52. And that’s more than doable given the circumstances beyond today’s bearish narrative.
Ultimately, FuboTV is a battleground stock that has been controlled by the bears. But a nearby purchase appears very attractive for bulls relative to the risk. Alternatively, a slightly out of the money intermediate-term bull call spread, which can amplify profits and reduce downside exposure through leverage and increased contract sizing, is another wager on FUBO worth consideration.
On the date of publication, Chris Tyler 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.