As cable decreases in popularity and streaming services grow in its place, is the sports-focused, FuboTV a good investment right now?
The sports streaming service, FuboTV (NYSE: FUBO), has had a tough few months with its stock value reducing by 61% from its 2021 high on 1 February. However, this stock is an interesting one to consider as more and more households are ‘cutting the cord’ with a 7.5% drop in the number of cable subscriptions in the last year. With FuboTV providing a platform that gives people the ability to watch their favorite sports without the need for a cable package, this company could be looking forward to a good few years.
But with many investors feeling wary about this stock we dive into the bull and bear case for FuboTV to see if it is a good buy right now.
The bull case for FuboTV
Although it has been hit hard this year with regards to its stock, the company as a whole has been doing fantastically. In its most recent report, FuboTV reported a revenue increase of 135% year-over-year (YoY) to $120 million for the quarter. This has been driven by three main segments. Its advertising revenue was up 206% YoY to $12.6 million; the number of paid subscribers increased 105% to 590’000 and alongside this, its stream content hours were up 113% to 228 million hours for the quarter, averaging at 129 hours per subscriber.
Furthermore, although FuboTV might seem like a small fish in a big pond, it does operate in a niche area that could have large potential in the future. As the cord-cutting trend heightens, many people are looking for a service that provides them with more than just live TV. This platform does focus mainly on sports entertainment but it also has series and movies available to watch.
By working with live internet platform streamed (OTT) sports, as well as its future roll-out of sports betting, Fubo might even have an edge over the likes of DraftKings as it will combine multiple areas of sports into one easy-access service.
With its stellar results for Q1 of 2021 and its highlighted areas for service growth, FuboTV could be an interesting buy during the current dip.
The bear case for FuboTV
Unfortunately for FuboTV, exclusive rights to different sports, leagues, and even games change regularly. This means that even with a FuboTV subscription there isn’t a guarantee that your favorite sport will always be available on its service. But, for the most part, subscribers should find something that they want to watch as 42 of the top 50 networks for sports, news, and entertainment are available; not to mention the 30’000 movies and TV shows.
Unfortunately, many investors are rather skittish on this stock as it has recently stated that it will be expanding into the world of online betting. This has caused many to question the overall vision of the company, which was further exacerbated by the resignation of Fubo’s president on March 12th. As of the beginning of May, at least 15% of the stock’s float was shorted.
Indeed, whilst FuboTV is expanding from content to betting, DraftKings is doing the opposite, going from online betting to encroaching on the world of TV. This could present direct competition with Fubo as the two companies will be occupying similar, if not the same, niches. This in combination with the competition from the likes of YouTube TV and Hulu+ Live TV might give FuboTV some growing pains over the next few years.
So, should I buy Fubo TV?
FuboTV is an interesting stock as it has been hit hard by the current market correction. Many investors have been worried about its future plans with sports betting and how this will become a streamlined service. However, its future plans serve only to expand its niche further afield and give it more room to grow as a company.
Furthermore, although it has plenty of competition, its current rate of growth shows that this is a company to watch over the next few years. As an investment, it would be a good idea to buy this current dip as this is a stock with plenty of potential.
- How much does FuboTV cost?
For its ‘Starter’ plan, it costs $64.99 per month. ‘Pro’ costs $69.99 per month, whilst the ‘Elite’ package costs $79.99
- Where is FuboTV based?
FuboTV is based in New York
- What sports can I watch on FuboTV?
The platform distributes live sports, news, and network TV series. You can watch the NFL, MLB, NBA, MLS, and international soccer through its service.
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