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Why fuboTV Stock Fell 37% Last Month

By Jon Quast - Apr 5, 2021 at 11:17AM

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The company finished 2020 strong, but investors are worried about increasing competition and one shareholder was forced to liquidate its position.

What happened

Shares of sports-centric streaming-TV company fuboTV (FUBO -1.86%) fell 37.3% in March, according to data provided by S&P Global Market Intelligence. The company reported positive financial results early in the month. However, it then had two big drops for unrelated reasons.

So what

Investors could initially celebrate fuboTV's strong finish to 2020, in which it reached nearly 550,000 subscribers. However, investors bid fuboTV stock up in 2020, optimistic about the company's plans to monetize its user base by offering sports betting directly on its platform. So, much of its stock price reflected that optimism.

But on March 3, sports-wagering platform DraftKings signed a deal with DISH Network, spooking fuboTV investors. Basically, investors see increasing competition in the space and wonder whether fuboTV has an edge.

A falling red arrow crashes down through the floor while a businessman looks on.

Image source: Getty Images.

Later in March, fuboTV stock sold off because of an odd situation with a hedge fund. According to IPO Edge, Archegos Capital was a heavily leveraged hedge fund that received a default notice from lenders. Ultimately, the lenders forced the hedge fund to liquidate positions, offering them to the market in enormous blocks all at once. FuboTV stock was supposedly among the stocks Archegos Capital was forced to liquidate.

By offering shares in a huge block like this, the market was essentially flooded with supply of fuboTV shares and not enough demand to meet it. For that reason, the stock fell hard late in the month.

FUBO Chart

FUBO data by YCharts

Now what

It's been a wild ride for fuboTV shareholders to say the least. From early October to late December, the stock was up almost 600%. Now it's down roughly 65% from December highs. March merely added to the recent pain. On the one hand, volatility is normal with the stock market. On the other hand, fuboTV is an extreme example of short-term volatility. 

While I can't predict what will happen with fuboTV's stock price in the coming weeks, I can say that good long-term investments need to have businesses that are performing well. FuboTV shareholders get their next opportunity to see how the business is doing when it reports results for the first quarter of 2021 on May 11.

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Stocks Mentioned

fuboTV, Inc. Stock Quote
fuboTV, Inc.
FUBO
$3.17 (-1.86%) $0.06
DISH Network Corporation Stock Quote
DISH Network Corporation
DISH
$20.78 (1.32%) $0.27
DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.03 (-0.85%) $0.12

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

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