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Why fuboTV Stock Got Crushed Today

By Jon Quast - Feb 23, 2021 at 12:29PM

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There was little to keep this stock from falling with the market today.

What happened

Shares of fuboTV (FUBO 3.15%) got crushed on Tuesday as the stock market in general pulled back. Many high-growth stocks have lofty valuations right now, and these were among the hardest hit today. fuboTV stock was among them and was down 12% as of 1 p.m. EST.

So what

For some context, fuboTV stock went up over 500% from late September to mid-December. Very little of this rally was because of positive business results. Rather, investors were increasingly optimistic about its future opportunity in sports betting. 

A visibly frustrated man looks at a red stock chart.

Image source: Getty Images.

This rapid rally made fuboTV a polarizing stock -- it had its share of fanatics and it increasingly attracted short-sellers. As a result, short interest in fuboTV skyrocketed. By Jan. 15, about 72% of the stock's float was sold short. That's a lot of people betting against fuboTV stock. 

However, investors became enthralled with short squeezes in January because of the epic GameStop rally. fuboTV was then a top target. There was a short rally as traders piled in, trying to induce a short squeeze. However, because of its high trading volume, shorts easily closed out their positions. Currently, short interest in fuboTV stock is down to just 23% of the float and is no longer a big issue.

Here's why I give all of this context: Many of the factors that drove fuboTV stock higher in recent months are now gone. Initial enthusiasm for sports betting is waning, and the stock is no longer participating in short-squeeze mania. With many high-growth stocks selling off today, it seems there was nothing to keep fuboTV stock from going down as well.

Now what

Typically, stock market volatility isn't as pronounced as it's been with fuboTV stock. However, it's still an important lesson nonetheless. In the short term, stocks can fly higher or crash lower for little fundamental reason. It's dizzying and unpredictable. But it's the nature of the beast.

That's why we try to ignore short-term volatility and focus on business results over the long term when it comes to our investments. fuboTV shareholders 2ill get a better glimpse at business fundamentals when the company reports earnings on March 2. 

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