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Here's Why fuboTV Stock Crashed Today

By Howard Smith - Mar 3, 2021 at 10:48AM

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Strong fourth-quarter earnings weren't enough to overcome several other headwinds for the stock.

What happened

Live sports-oriented streaming service fuboTV (FUBO 9.35%) reported its fourth-quarter earnings last night and said it surpassed $100 million in quarterly revenue for the first time. But investors are focusing on several other things, knocking the stock down Wednesday morning. 

As of 10:25 a.m. EST, shares of fuboTV were down 15.5%.

So what

The company reported that its full-year total revenue increased by 83% to $268.8 million, and it expects that to jump another 73% in 2021 at the midpoint of guidance. But that still makes the company's valuation on a price-to-sales basis expensive at more than 8. Other news today, of a strategic partnership between DraftKings (DKNG 3.37%) and Dish Network (DISH 1.36%), also has investors worrying about coming competition. 

fuboTV screen showing Download Now

Image source: fuboTV.

Now what

One reason for investors' valuation has been the company's moves toward creating its own sportsbook to integrate with its sports-centric streaming experience. In its letter to shareholders discussing the fourth quarter and full year 2020, the company said, "We believe our expected expansion into wagering and interactivity will further differentiate us from our peers."

But the newly announced partnership between DraftKings and Dish Network puts DraftKings' sports betting and fantasy sports app on Dish Network's platform, essentially giving customers an interactive sportsbook. One of Dish Network's services is streaming platform Sling TV, bringing immediate competition to fuboTV's plans.

Fubo's business results were solid. Subscriber growth was strong. It ended 2020 with almost 550,000 paid subscribers, representing a 73% year-over-year increase. But investors have valued the stock based on its differentiated strategy. Coming competition does reinforce that a move into sports betting could be lucrative, but fuboTV still needs to grow into its valuation. Long-term investors shouldn't worry about short-term moves in the stock as long as the underlying business continues to grow. 

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Stocks Mentioned

fuboTV, Inc. Stock Quote
fuboTV, Inc.
FUBO
$3.51 (9.35%) $0.30
DISH Network Corporation Stock Quote
DISH Network Corporation
DISH
$22.30 (1.36%) $0.30
DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.72 (3.37%) $0.48

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