fuboTV (NYSE: FUBO) operates a live TV streaming platform for live sports events, as well as news and entertainment content in the U.S. and Europe. The fuboTV platform allows users to access content via streaming devices and Smart TVs. Valued at a market cap of $2.85 billion, FUBO stock is down 68% from 52-week highs.
Let’s see if FUBO stock should be part of your portfolio right now, given its massive decline this year.
fuboTV set to experience stellar growth
In Q3 of 2021, fuboTV reported revenue of $156.7 million which was an increase of 156% year over year. Its number of subscribers also doubled to 944,605 in Q3. The company added 262,884 net subscribers in Q3 which was more than the total number of additions in the whole of 2020.
This stellar growth meant fuboTV customers streamed 284 million hours of content on its platform, an increase of 113% year over year.
Its adjusted contribution margin or ACM rose by 189 basis points to 12.4% on the back of a 10% increase in average revenue per user.
fuboTV forecast 2021 sales between $612 million and $617 million, up 135% compared to sales of $217.7 million in 2020. The company expects to end the year with between 1.06 million and 1.07 million subscribers.
fuboTV recently surpassed the one million subscriber mark which is a remarkable feat given it ended Q2 of 2020 with a subscriber base of 286,000. The million subscriber milestone indicates increased relevance, leverage, and influence with content partners and sporting leagues. It also provides the company with additional data points that can be used to improve product development as well as generate ad-sales opportunities.
The long-term drivers of fuboTV remain intact as consumers will continue to choose streaming services over traditional pay-TV platforms considering they get access to a more personalized viewing experience.
Further, fuboTV is confident about the strength of its product offering and its modern technology stack that will help it expand its subscriber base at a robust pace going forward.
Focus on acquisitions
fuboTV recently announced it closed the acquisition of Molotov SAS which is the leading live streaming company in France. Its offerings include a direct-to-consumer live TV streaming service and an advertising video-on-demand service called Mango. The acquisition will provide fuboTV with access to four million monthly active users.
fuboTV also announced the acquisition of Edisn.ai which is an India-based AI-powered computer vision platform with patent-pending video recognition technologies. The acquisition will allow fuboTV to create an interactive and immersive live TV experience.
What next for FUBO stock investors?
Despite its exciting growth metrics, fuboTV stock has grossly underperformed the broader markets in 2021. One major reason for this is the company’s widening losses. In Q3, its operating expenses stood at 165% of total revenue which indicates its current customer acquisition costs are unsustainable. It reported a net loss of $106 million in the quarter ended in September 2021.
However, investors should also understand that top-line growth is helping fuboTV to improve margins and leverage its cost structure. For example, operating costs as a percentage of sales stood at 234% in Q3 of 2019 and 207% in 2020.
Analysts tracking the stock expect fuboTV sales to rise by 184% to $619 million in 2021 and 72% to $1.06 billion in 2022. This will allow it to narrow the loss per share from $7.4 in 2021 to $2.31 in 2020.
fuboTV’s subscriber growth, recent acquisitions, and improving bottom-line make it a top bet for investors at its current valuation. FUBO stock is valued at a forward price to 2022 sales multiple of less than 3x which is very reasonable. Wall Street expects FUBO stock to touch $44.62 in the next 12-months which is over 100% above its current trading price.
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