It's been more madness than March for shareholders of fuboTV (FUBO -3.50%). The stock enters the new week trading 65% below the high it set over the holiday season three months ago.
Shares of the sports-first live TV streaming service would have to nearly triple to get back to where they were at their recent peak. It may be a tall order to get there soon, but that's a high ceiling with plenty of room to trounce the market through the final three quarters of 2021 without bumping its head. Let's go over some of the reasons I still believe in fuboTV stock.
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1. Growth is still on the menu
Despite the drastic recent haircut, this is still a stock that has more than doubled since hitting the market at $10 nearly six months ago. It's certainly living up to its end of the growth-stock contract, and it's actually been stepping on the gas even as patrons head for the speedway exits.
Pro forma revenue rose 71% in its first quarter as a public company late last year, accelerating to a better-than-expected 98% year-over-year burst in the top line in its second earnings report. Its guidance calls for 98% to 102% in revenue growth for the current quarter, and we've already seen how fuboTV has been setting conservative outlooks early in its public tenure. How can you not like that?
It's true that fuboTV is small. It had just 547,880 paid subscribers on its platform at the start of this year, but it's generating nearly $70 in average revenue per account between subscription fees and industry-leading ad revenue. Bears may have valuation concerns that carried more weight when the stock was trading nearly three times higher back in December, but it's hard to argue that fuboTV hasn't exceeded growth expectations so far.
2. Last week's media stock sell-off was collateral damage
If Friday's 15% hit on fuboTV shares seems extreme, keep in mind that a pair of iconic cable networks suffered even bigger declines. With some media stocks having pre-IPO ownership stakes in fuboTV, it's easy to wonder if the ones that haven't already cashed out of the live TV streaming service will do so in an effort to raise money now that the industry is out of favor.
I expect the market rotation out of media stocks won't last long. Content is still king, and streaming distribution will continue to be a major part of every player's growth strategy. It's unfortunate that an already reeling fuboTV got caught on the coattails of cable stocks getting tripped, but once all of the market mechanics play out, the value will be there for investors looking for one of the fastest-growing stocks in the streaming revolution.
3. Cord-cutters aren't coming back
Folks are kissing their cable and satellite TV plans goodbye. All of the popular streaming services are cheap ($15 a month or less), but they lack the live sports and breadth of network content that cord-cutters still crave. There's a reason why roughly 12 million homes are now paying for live TV streaming services, and that will continue to climb in the coming years.
Right now, fuboTV is way behind Alphabet's YouTube TV, Disney's and Comcast's Hulu+ Live TV, and DISH Network's Sling TV in terms of subscribers, but it's growing faster than all of them. A growing slice of the market in a widening pie is a pretty spectacular thing to see play out over time.
No one will argue that fuboTV is perfect. Like its larger rivals, it stopped carrying the regional sports networks that may send folks scurrying back to traditional linear TV at some point. It had some blind spots in coverage of early regional games in the NCAA basketball tournament.
But with its revenue growth outpacing its programming costs, it does have the flexibility to live up to its "sports first" billing by playing nice with the regional sports networks before the big boys do. This is a golden opportunity that fuboTV shouldn't squander -- and with the stock itself on sale, this is also a chance that potential investors may not want to waste as well.
