Please ensure Javascript is enabled for purposes of website accessibility

Why fuboTV Stock Tanked Friday

By Howard Smith - Updated Mar 26, 2021 at 4:44PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The streaming television and sports-betting service has been out of favor with investors for the last month.

What happened

Shareholders of fuboTV (FUBO 3.68%) have been on a wild ride since the company went public last year. After a sharp spike up on high potential and speculation, a short-seller report helped knock shares right back down. 

After the calendar turned, shares started marching back up with a gain of more than 50% in January. But since the beginning of February, the stock has dropped by 55%, including a decline of more than 15% today. 

So what

There was some minor news from the company earlier this week but nothing that should have impacted the direction of the stock. Fubo filed its annual report for 2020 yesterday, but there doesn't look to be anything investors didn't already know. Without any company news, it's likely the stock is just following the recent rotation out of high-growth names into industrials and value stocks

Man with head in hand looking at computer screen showing stock chart going down.

Image source: Getty Images.

Now what

The drop in Fubo shares since mid-February coincides with the drop in the Nasdaq composite from its recent highs. But while the Nasdaq is down about 7% since that time, fuboTV shares are off more than 50%. 

That's not overly surprising, however, for speculative stocks at high valuations. Fubo's business continues to grow. Both revenue and subscriber growth are accelerating, with fourth-quarter revenue over $100 million for the first time. And paid subscribers numbered almost 550,000 as of the end of 2020, with 17% of them added in the fourth quarter. 

The still unprofitable company is estimating more than 70% revenue growth in 2021. But even using that estimate, the valuation is still five times sales even after the recent share-price decline. Combining high growth with high valuation is going to cause the stock price to swing, and investors should expect that to continue going forward. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

fuboTV, Inc. Stock Quote
fuboTV, Inc.
$3.38 (3.68%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.