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Multiple Risk Factors Weigh Heavily on FuboTV Stock

  • FuboTV (FUBO) stock is rapidly heading toward zero.
  • Inflation-pressured consumers won’t likely be motivated to subscribe to FuboTV.
  • Investors might want to cut their losses with FuboTV and focus on financially firmer businesses.
FUBO stock - Multiple Risk Factors Weigh Heavily on FuboTV Stock

Source: Burdun Iliya / Shutterstock.com

Headquartered in New York, FuboTV (NYSE:FUBO) provides virtual content with a focus on sports streaming and betting. That said, FUBO stock has already destroyed a large amount of investors’ wealth. It’s a hard truth to face, but there’s no compelling reason to continue risking further losses with this stock.

There are streaming standouts, yet FuboTV simply isn’t one of them. Indeed, with a market capitalization of less than $500 million, FuboTV is a small fish in a big pond of streaming-market competitors.

Nevertheless, some traders might be enticed by the seemingly low FuboTV share price. After all, you’re supposed to buy when other people are selling, right?

Not always, as value is more important than price. Sometimes, it’s best to leave a falling stock alone, especially when the company’s financials are problematic and consumers are tightening their budgets.

FUBO FuboTV $2.52

What’s Happening with FUBO Stock?

You can’t say we didn’t warn you. On June 21, we exposed FUBO stock as a toxic asset that’s going nowhere fast. The stock was priced at $2.71 at that time, after already having crashed from a 52-week high of $35.10.

Fast-forward to mid-July, and FuboTV shares made no progress, trading at around $2.50. Remember, just because a stock has a low price in dollar terms, doesn’t mean that it can’t go much lower on a percentage basis.

Furthermore, FUBO stock is highly volatile as it has a five-year monthly beta of 3.66. In other words, the stock has historically moved three to four times as fast, in both directions, as the overall stock market. Thus, FuboTV’s investors have gotten a raw deal: high volatility but no lasting price appreciation.

Could the situation get any worse? Yes, it certainly could. At least one expert on Wall Street cites multiple potential problems that FuboTV and its investors will have to contend with.

Weighing the Risks

Needham analyst Laura Martin pulled no punches whatsoever in her outlook for FuboTV. She lowered her estimate for FuboTV’s fiscal-year 2022 revenue from $1.09 billion to $1.047 billion. In addition, the analyst reduced her forecast for FuboTV’s full-year earnings per share (or EPS) from an already pessimistic loss of $2.89 to an even worse loss of $3.20.

Martin’s revised estimates “‘reflect growing competition in the vMVPD space, slower streaming ad-rev growth, and weakening US consumer spending owing to higher gasoline prices and other inflationary pressures on goods.'” Her points are duly noted, and it’s indisputable that consumers are struggling due to high inflation.

When the price of almost every product and service rises, which ones will consumers keep? They won’t likely choose sports streaming services over food and rent. FuboTV’s services simply won’t be a priority in a time when the Consumer Price Index exceeds 9%.

Besides, much like America’s struggling consumers, FuboTV isn’t in an ideal financial condition. During 2022’s first quarter, FuboTV incurred a $140.8 million net loss. That’s significantly worse than the $70.2 million loss from the same time a year ago.

What You Can Do Now

Overall, Martin pointed out some of FuboTV’s major problems. Among them is the issue of high inflation, which could dent FuboTV’s already deteriorating bottom line.

As for FUBO stock, don’t confuse an apparently low price with a good value. Frankly, there’s not much value to speak of with this stock. Therefore, you can choose to cut your losses if you’re already a FuboTV investor or stay away if you’re considering buying the shares.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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Article printed from InvestorPlace Media, https://investorplace.com/2022/07/multiple-risk-factors-weigh-heavily-on-fubo-stock/.

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