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Did fuboTV Stock Finally Bottom Out This Time?

By Rick Munarriz – May 12, 2021 at 9:05AM

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The highs and lows of live sports find fuboTV hitting a six-month low on Tuesday, only to soar a few hours later after posting blowout financial results.

The timing couldn't be better for fuboTV (FUBO -4.12%) to finally put on a winning game face. The live TV streaming provider posted blowout financial results after Tuesday's market close. The stock had hit a six-month low earlier in the trading day. 

Coming through with its third consecutive quarter of accelerating year-over-year top-line growth since going public late last year, fuboTV was full of positive surprises. A historic sequential increase in subscribers during a seasonally sleepy quarter. A big boost to its full-year guidance. FuboTV had a lot to prove heading into this critical financial update, and it delivered. 

Friends watching a soccer game on a flat screen TV. Their couch is on a rug made of grass.

Image source: Getty Images.

Playing to win 

There's a lot of skeptic silencing in fuboTV's first-quarter performance. Revenue soared 135% to $119.7 million, well ahead of the 98% to 102% that it was forecasting in early March. This is the second time in a row that fuboTV has put up lowball guidance that it beat with ease. It's a trend that bears noting -- and respecting. 

There's still plenty of red ink here, but with operating expenses only up 80% relative to the 135% top-line burst we're seeing net loss and adjusted EBITDA margins improving. FuboTV's average revenue per user is rising, and against that welcome trend the live TV platform is clocking in with a sequential improvement in subscriber acquisition costs. 

We're seeing tailwinds riding tailwinds here. FuboTV now has 590,430 subs on its books, 105% more than it had a year earlier. Revenue is growing even faster on the heels of a 131% surge in subscription revenue and ad revenue more than tripling. Another neat tidbit on its subscriber count is that it's also 43,000 higher than it was in December. This is the first time that it actually posted a sequential increase in accounts during the first three months of the calendar year. 

FuboTV now sees 830,000 to 850,000 subscribers by year-end, up from the 760,000 to 770,000 it was targeting just two months ago. This is old hat for investors as fuboTV jacked up its 2020 subscriber goal in October, November, and January last time out. This should also be a reminder that any likely revision in a couple of months will probably be higher yet again.

With average revenue per user approaching $70 a month between subscriptions and ads, can things get even better? Well, fuboTV is still on track to roll out a free-to-play interactive gaming app that will enhance the live sports it streams through more than three dozen channels. The stakes will be raised in the fourth quarter when Fubo Sportsbook launches in markets where it can clear legal hurdles. Fantasy sports and then actual wagering will make fuboTV even more money than they are right now, but more importantly, they're going to improve engagement. 

FuboTV has been one of the wildest stocks since its IPO seven months ago. It was a six-bagger at one point, only to shed more than three-quarters of its value by Tuesday's market open. A blowout quarter is the perfect cure to market indifference. Now it's up to fuboTV to make the most of its new momentum to start winning again.

Rick Munarriz owns shares of fuboTV, Inc. The Motley Fool recommends fuboTV, Inc. The Motley Fool has a disclosure policy.

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