It may seem lame by this week's short-squeezing standards, but a week ago there was an interesting contrast in fuboTV's (FUBO 2.23%) analyst activity. One Wall Street pro (Barrington Research analyst James Goss) initiated coverage of the live-TV streaming service with a bullish outperform rating and a $40 price target. Two days earlier, the bearish Rich Greenfield at LightShed Partners had lowered his Street-low price target on fuboTV from $8 to $6.50.
Goss won the first round of this fight. The stock crossed the $40 mark on Monday of this week. This isn't a surprise: The stock only needed to climb nearly 33% to hit the bull's target. At the time of Greenfield's call, it would've taken a better than 80% plunge to hit his goal.
But you have to admire the bullish call's timing on fuboTV. The stock has risen sharply for five consecutive trading days since Goss picked up coverage of the sports-first streaming platform, soaring a whopping 55% in that five-day run.
Image source: Getty Images.
The lead changes during the course of the game
Bulls can't take victory laps just yet. If there's anything that fuboTV stock has taught us in its first four months of public trading, it's that it will be volatile. This week's surge is also being fueled by a rally in many of the market's heavily shorted stocks. More than half of fuboTV's float is currently being shorted by investors who see the the stock as overvalued.
This doesn't mean the bullish thesis boils down to a short squeeze. There is a lot to like in fuboTV. The platform is small, but the speed at which it's growing is faster than Kansas City Chiefs wide receiver Tyreek Hill running a "go" route. In its first quarterly report as a public company, revenue rose 71% for the three months ending in September of last year. Earlier this month, it offered preliminary results showing that top-line growth accelerated at a 77% to 84% year-over-year rate in the fourth quarter.
The service had just 545,000 subscribers entering into 2021, but it's a lucrative audience that spends an average of four hours a day streaming the platform. It is generating an average $7.50 in monthly ad revenue per user, and that's on top of the $65 monthly fee for the entry-level plan featuring 118 different channels.
The big selling point for fuboTV is that more than three dozen of those networks are dedicated sports channels. There are blind spots in its coverage. It finally picked up ESPN last summer, but it also dropped Turner's sports-heavy properties. Like every other live-TV streaming service outside of AT&T (T 1.21%) TV, it's also not carrying Sinclair's regional sports channels.
There may never be a complete canvas of coverage for any platform, but fuboTV's breadth of global sports channels and its pole position as the first platform to stream select events in 4K do make it stand out in an otherwise cluttered marketplace.
Like other consumer-facing companies that experience a bump in demand after going public (in this case, from cord-cutting investors), it's hard to bet against fuboTV here. Some critics are skeptical about the role that it will play in sports wagering after a pair of small acquisitions in this niche, but don't underestimate its captive audience, which is already generating more than three times the monthly ad revenue per user that Roku (ROKU 5.32%) currently collects. Despite competing against some of the largest media companies, telcos, and tech darlings, fuboTV has come to play.
