Last month witnessed a 22.5% surge in the value of fuboTV's stock.
Last month witnessed a 22.5% surge in the value of fuboTV's stock.
FuboTV's (FUBO up by 5.30%) shares soared a staggering 22.5% last month, as per information from S&P Global Market Intelligence. This streaming TV platform, which caters mainly to sports enthusiasts, secured a broadcast agreement with another regional sports network and The Athletic, a distinguished sports news hub. The stock, however, remains 54% lower for the year (YTD), and an astounding 98% below its record high, due to substantial capital depletion and significant share dilution.
Let's decipher why fuboTV's shares climbed higher last month.
Additional regional sports
On October 25, fuboTV revealed its new broadcasting agreement with the Chicago Sports Network, a local provider serving the Chicago metropolitan area, featuring Chicago Bulls, Chicago White Sox, and Chicago Blackhawks games. This partnership came at an opportunistic time, just in time for the hockey and basketball seasons. It could potentially lure some local fans to switch to fuboTV for streaming their favorite games. The greater Chicago area has a population of approximately 10 million inhabitants, which presents a significant market opportunity for fuboTV. As of the end of the third quarter, the company had only 1.6 million subscribers.
Alongside this announcement, fuboTV entered into a partnership with The Athletic, a prominent source for sports news. This partnership will incorporate some of The Athletic's content onto fuboTV and offer cross-promotional potential. Finally, fuboTV unveiled more tiers to its streaming package, making it possible for individuals to separately subscribe to Paramount+, NBA League Pass, and The FanDuel Sports Network, without being obliged to pay for its costly virtual cable bundle.
Given its sports-centric focus, some investors see potential in fuboTV as a beneficiary in the shift from traditional cable to streaming TV. Regrettably, its performance has been disappointing in the long run, with its value plummeting 98% from its peak. If you had invested $100 in stock at its peak, you would possess a mere $2 in value today.
Revenue growth, ongoing losses
fuboTV's stock has endured a downfall due to its recurring losses. Despite a 139% revenue increase in the past three years, fuboTV has never reported positive free cash flow. Over the past 12 months, it has consumed around $150 million in cash, while carrying only $146 million in cash reserves on its balance sheet.
The company has also been a significant burden to shareholders, by escalating its share count. The total shares outstanding have soared an astonishing 114% in just the past three years. This rate of increase is not sustainable for the business.
In conclusion, while fuboTV added another substantial regional sports network to its platform, its questionable business model and perpetual cash burn should discourage investors for the time being.
The sudden surge in FuboTV's shares last month might be attributed to its strategic partnerships, such as the agreement with the Chicago Sports Network and The Athletic, which could potentially attract more subscribers and increase revenue from the lucrative Chicago market. Investors looking into financing opportunities within the streaming TV sector might find potential in FuboTV's shift from traditional cable to streaming TV, despite its disappointing long-term performance and substantial capital depletion.