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Why fuboTV Stock Fell Sharply Today

By Jon Quast - Feb 25, 2021 at 4:41PM

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With the market down sharply, this volatile stock was behaving fairly normally.

What happened

Shares of fuboTV (FUBO 0.00%) fell 11% on Thursday without any company-specific news. However, the S&P 500 fell 2.5% today as well, which is a substantial move for the market as a whole. On days like today, it's not uncommon to see volatile stocks like fuboTV sell off harder than the average.

So what

Keep in mind that fuboTV is a polarizing stock. The company has many ardent bulls, as evidenced by the stock's pricey valuation. For perspective, it trades at 34 times trailing sales even after today's sell-off. With a valuation that high, this growth stock clearly has supporters.

A visibly frustrated man puts his hands on his face with a down stock chart in the background.

Image source: Getty Images.

However, fuboTV has also attracted a lot of bears. In January, almost 72% of the stock's float was sold short. This has come down considerably since then; as of Jan. 29 (the most recent data) only 23% of the stock's float was sold short. However, although it's down, that's still a lot of investors betting against this company.

It isn't uncommon for polarizing stocks like fuboTV to be more volatile than the rest of the market. Volatility is measured by a metric called "beta." fuboTV stock's beta is about 2.8 according to Yahoo! Finance, implying it's been nearly three times more volatile than the market in the past. That played out a little stronger today, considering it fell more than four times harder than the S&P 500. 

Now what

Volatility is a normal part of investing; all stocks are volatile to a degree. As investors, we accept that there will be ups and downs along the way. Furthermore, whatever your position on a stock, there's someone else out there with a different point of view than yours. The two sides of fuboTV stock debate can be a good thing: Knowing the counterargument to your investing thesis is important for making good decisions of your own.

All that to say, today wasn't a good day for fuboTV shareholders. Knowing volatility is normal might not make it feel any better. However, on the bright side, nothing fundamentally changed for the company today. If fuboTV stock had fallen for a valid concern, then it might be time to recheck your thesis. But since it's just normal volatility, doing nothing is probably the best course of action for shareholders.

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