FuboTV (NASDAQ:FUBO) stock is up 20% since trading started Oct. 17, after it abandoned plans to get into the sports betting business. The sports-oriented streaming service also announced preliminary results for the September quarter that beat previous guidance.
FuboTV now expects North American revenue of $210 million for the September quarter, up 34% from last year. The North American subscriber count is now 1.22 million, it said, up 27%. FuboTV also owns a French service, Molotov, which expects third quarter revenue of $5.5 million from 350,000 subscribers.
Why, Fubo, Why?
Fubo’s recent action is scant comfort to those who bought when the stock was at $15 in January. Its market cap is now $844 million, below expected 2022 revenue. The problem, like all of 2022’s fallen angels, is losses of more than $250 million in the first half of the year.
The losses have our Louis Navellier telling investors to stay away. The company burned through about $220 million of cash in the first half, but still reported $373 million of it in June thanks to stock sales. The sports betting business, with its high customer acquisition costs and advertising expense, was a particular problem.
Cutting off that business cuts the cash burn and could make FuboTV an attractive purchase for a gambling company like Caesars Entertainment (NASDAQ:CZR) or Penn Entertainment (NASDAQ:PENN). But it also hurts the company’s whole investment thesis.
It also fails to solve the problem of sports rights. FuboTV couldn’t come to an agreement with regional sports networks (RSNs) owned by Sinclair Broadcast Group (NASDAQ:SBGI), which finally launched its own streaming service. Now sports rights are going to pure streamers like Apple (NASDAQ:AAPL) that don’t need FuboTV to reach customers.
What Happens Now for FUBO Stock?
I was among those taken in by FuboTV’s promises. I recanted early this year, but have still taken big losses on my own account.
Based on the latest news, it’s time to cut those losses in FUBO stock.
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On the date of publication, Dana Blankenhorn held long positions in FUBO and AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
