The live TV streaming platform fuboTV Inc. (FUBO) has seen its stock price tumble 29.6% year-to-date and 37.3% over the past month. In fact, the stock is currently trading at $19.71, nearly 70% below its 52-week high of $62.29, which it hit on December 22.
Although FUBO has gained 181.6% over the past year, due primarily to a significant growth in subscription, it reported a huge net loss for 2020. Moreover, the company’s high operating costs and broadcasting expenses are causing its expenditures to outweigh its revenue generation.
In an increasingly crowded streaming space, FUBO remains unprofitable. And even though the company remains focused on growing its subscription base by investing in new content, it faces immense competition from TV streaming titans, such as Disney+ and YouTube TV. So, we think the stock could witness a further price retreat.
Here is what we think could influence FUBO’s performance in the near term:
Competitive TV Streaming Market
A TV streaming war has hit a new level of competition with the launch of more services by entertainment titans, including Disney+, YouTube TV, AppleTV Plus, and Hulu. These household name brands are offering an increasing array of content choices to their customers at affordable prices. Amid this environment, FUBO’s loss making business and limited customer base could be a real challenge to the company’s efforts to stay afloat.
Increasing losses and Expenses
FUBO’s subscription revenue increased 91% year-over-year to $91.4 million in the fourth quarter ended December 31, 2020. However, its $89.9 million in subscriber-related expenses represented a 42.5% year-over-year increase. Its total operating expenses were $197.4 million, compared to $18.24 million in the prior-year quarter. FUBO reported an adjusted EBITDA of negative $43.5 million. The company reported an operating loss of $92.32 million and a net loss of $167.83 million. Its loss per share was $2.47, compared to $1.07 in the fourth quarter of 2019.
The company’s trailing-12-month CAPEX/Sales of 0.08% is 96.9% lower than the industry average 2.4%. FUBO’s 0.3% asset turnover ratio is 44% lower than the industry average 0.6%. And its trailing-12-month gross profit margin and EBIT margin came in at negative 7.4% and 106.1%, respectively.
POWR Ratings Reflect Bleak Outlook
FUBO has a D overall rating, which translates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. FUBO has a D Quality Grade, given the stock’s weak profitability.
In terms of Value Grade, FUBO has a D. This justifies the stock’s trailing-12-month EV/Sales of 13.31x, which is 188.2% higher than the industry average of 4.62x.
It also has a D grade for Stability, given that it is more volatile compared to its peers.
Beyond what we’ve stated above, one can view additional FUBO ratings for Growth, Sentiment, and Momentum here.
Of the 13 stocks in the F-rated Entertainment – Sports & Theme Parks industry, FUBO is ranked #8.
Click here to view the top-rated stocks in the same industry.
Given the competitive streaming landscape, FUBO’s lower profitability and increasing losses might retard its growth in the near term. Even its increasing user base will not be sufficient to propel its growth if its subscriber-related expenses and broadcasting expenses continue increasing. So, we think the recent price dip does not provide a good entry point in the stock.
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FUBO shares were trading at $20.09 per share on Thursday morning, up $0.38 (+1.93%). Year-to-date, FUBO has declined -28.25%, versus a 11.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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