Monday was an interesting (and ultimately lucrative) day for investors in fuboTV (FUBO 6.72%). Wedbush analyst Michael Pachter boosted his price target on the live-TV streaming specialist from $40 to $50. With fuboTV kicking off the week at $42.25, it didn't make sense for Pachter to have an outperform rating on the shares. He would have to either adjust his bullishness or prop his price goal higher.
He chose to view fuboTV in a more encouraging light, but he's going to have to take another look just 24 hours later. Monday's 24% surge for the fast-growing player in the cord-cutting revolution sent the stock crashing through the $50 ceiling with its $52.40 close. It has now broken through Pachter's price targets in back-to-back trading days.
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Game on
Pachter believes that fuboTV is well positioned to cash in on the migration away from traditional cable and satellite television. He also plays up the potential of what some are now calling cord-nevers, younger consumers who will just hop into streaming platforms without ever going through the now-archaic cable TV struggles. Pachter sees fuboTV competing favorably for a slice of that growing pie.
We're still in the early innings of the live-TV streaming revolution, and fuboTV is a small player with just 545,000 subscribers at end of 2020. But it had only 316,000 accounts on its platform a year earlier, so the growth is real, and it's spectacular. Revenue rose 71% in the third quarter of last year, and its early read on the fourth quarter (which it will discuss later this month) shows top-line gains of 77% to 84%.
After starting as a soccer streaming service, more than three dozen of the nearly 120 channels fuboTV now offers are live sports networks. Leading with sports as a hook is smart. The one thing that cord-cutters miss when they kiss their cable and satellite TV providers goodbye is live sports.
The rub here is that fuboTV is competing against tech giants and media stocks with greater financial resources. It would break the bank if it wanted to follow the lead of Hulu + Live TV, which paid NFL stars Baker Mayfield and Saquon Barkley and NBA player Joel Embiid to appear in a sports-pumping commercial.
The fuboTV audience is still a selling point. Subscribers spend an average of four hours a day on the platform, and with juicy demographics, marketers are flocking to it. On top of hefty monthly subscriptions, fuboTV is generating $7.50 a month per subscriber in ad revenue. After back-to-back months of gaming and gambling acquisitions, the company is ready to roll out a fantasy sports platform this summer and a more ambitious sportsbook shortly after that.
For now, fuboTV is one of this year's hottest stocks, up 87% in 2021 through Monday's close. A lot of the market's heavily shorted stocks were rallying last week, but fuboTV kept climbing on Monday when most of last week's winners retreated sharply. We'll see how Wedbush's Pachter reacts at the new crossroads. Does he boost his price target to $60? Does he downgrade his rating? Does the stock give back some of its recent gains to make the first two questions moot? The game's afoot, and for now it seems as if fuboTV is airing it live.
