fuboTV Inc. (FUBO - Get Rating) is a live TV platform operator that broadcasts sports, news, and entertainment content internationally. The company’s fuboTV platform enables users to access content through streaming devices.

Last month, FUBO stock was downgraded from Outperform to Neutral by Wedbush analysts, which created a 6.5% pullback in its stock. According to Wedbush analyst Michael Pachter, although the company has set bold targets for 2025, which include being free cash flow positive and achieving an adjusted EBITDA margin of positive 15%, the company might run out of cash. Pachter stated that it’s “uncertain how dilutive the capital raise will be and how rapidly their cash burn will improve.”

The stock has declined 78.2% year-to-date and 54.1% over the past six months to close its last trading session at $3.38. It has declined almost 4% intraday. It is trading substantially below its 52-week high of $35.10 and close to its 52-week low of $2.32.

Here are the factors that could affect FUBO’s performance in the near term:

Bleak Bottom Line

For the fiscal second quarter that ended June 30, FUBO’s total revenues increased 69.5% year-over-year to $221.89 million. However, its operating loss rose 38.8% from the prior-year quarter to $112.53 million.

Adjusted net loss came in at $82.52 million, up 60.7% from the same period last year. Adjusted EPS declined 21.6% from the prior-year period to a negative $0.45.

Negative Profit Margins

FUBO’s trailing-12-month EBITDA margin and net income margin of a negative 47.81% and 55.73% are significantly lower than their respective industry averages of 19.31% and 5.80%.

Its trailing-12-month ROE, ROTC, and ROA of a negative 77.23%, 28.30%, and 34.85% compare to their respective industry averages of 6.66%, 3.58%, and 2.48%.

Analysts Expect Bottom-line Declines

The consensus EPS estimate of a negative $0.75 for the current quarter (ending September 2022) indicates a 1.4% year-over-year decrease. Likewise, Street EPS estimate for the current year (fiscal 2022) of a negative $3.02 reflects a decline of 8.6% from the prior year.

Moreover, FUBO has missed consensus EPS estimates in three of the trailing four quarters.

POWR Ratings Reflect Bleak Prospects

FUBO’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

FUBO has a Stability grade of F in sync with its five-year monthly beta of 3.50. It also has an F grade for Quality, consistent with its bleak profitability margins.

In the 16-stock Entertainment – Sports & Theme Parks industry, it is ranked last. The industry is rated F.

Click here to see the additional POWR Ratings for FUBO (Growth, Value, Momentum, and Sentiment).

View all the top stocks in the Entertainment – Sports & Theme Parks industry here.

Bottom Line

FUBO’s stock has declined significantly over the past months and is trading close to its 52-week low. However, its bleak bottom-line performance in the last reported quarter and negative ROE are concerning. Hence, I think the stock could be best avoided now.

How Does fuboTV Inc. (FUBO) Stack Up Against its Peers?

While FUBO has an overall POWR Rating of F, one might consider looking at its industry peers, Endeavor Group Holdings, Inc. (EDR - Get Rating) and Vivid Seats Inc. (SEAT - Get Rating), which have an overall B (Buy) rating.

FUBO shares were trading at $3.48 per share on Tuesday afternoon, up $0.10 (+2.96%). Year-to-date, FUBO has declined -77.58%, versus a -17.07% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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