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Why Has fuboTV Soared 95% in Five Weeks?

By Rick Munarriz - Jun 17, 2021 at 9:05AM

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A lot of things are going right for the live TV streaming service since it hit a year-to-date low just last month.

We're nowhere close to peak fuboTV (FUBO -9.86%) these days, but the bounce has been encouraging for investors of the provider of a fast-growing "sports first" live TV streaming service. The stock has nearly doubled -- up 95% -- since it hit a price below $15 per share just five weeks ago.

The initial catalyst was a blowout quarterly report delivered just hours after the shares hit a recent low on May 11. The buzz for the company's gaming aspirations is also starting to resonate with investors. And it doesn't hurt that a heavy short interest has made fuboTV a trendy meme stock. The last catalyst mentioned will ultimately prove fleeting, but the other tailwinds should give the stock strong momentum in the coming months.

A group of soccer fans watching a game on TV, gathered on an area rug that looks like a field of grass.

Image source: Getty Images.

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FuboTV would have to more than double to take out the all-time highs it hit six months ago. Work the math and we're talking about a stock that had shed more than three-quarters of its peak value when it hit a bottom in the middle of May.

Was the optimism overdone late last year, as fuboTV surged after making the first of two acquisitions that would give it some more skin in fantasy sports and actual wagering on athletic events? Was the pessimism too thick at last month's low? It's OK to nod in approval of both extreme scenarios.

Reality is kind these days. Accelerating growth and back-to-back "beat and raise" financial updates since hitting the market last fall are good looks, as they would be for any company. We're also seeing fuboTV make good on its promise to incorporate its two small buyouts into incremental revenue streams this year. Earlier this month fuboTV began beta-testing live stats and contests on select soccer matches for subscribers streaming on Roku or Android mobile devices. FuboTV expects to expand access to most platforms soon, and it hopes that it can be out of beta in time for the football season.

Contest prizes are limited to extending fuboTV subscriptions, but it won't be long before advertisers get in on the fun by offering winning swag, in exchange for promotion on a service where the user base has more than doubled over the past year. fuboTV is already a leader in the average ad revenue per user it generates every month, on top of its subscription premiums. Now it has new revenue streams, and the live stats and contests are retention tools for the bigger catch that awaits later this year. fuboTV is still on track to launch a sportsbook in the fourth quarter, and on Wednesday it struck a deal to improve its chances to succeed.

This week fuboTV announced that former Penn National Gaming exec Carl Sottosanti has been added to its board of directors. He will also serve as chairman of its gaming compliance committee, a beefy task since fubo Sportsbook is going to have to meet regulatory requirements that vary from state to state.

If the play executes the way it looks in the fuboTV playbook, it could be pretty spectacular. fuboTV has only 590,430 subscribers right now, but if churn is kept in check and the new features prove magnetic, the service could grow its audience at the same time that it jacks up its average revenue per user.

Everything could fall apart, of course. States, or even streaming hubs, may fight back against sports gambling on their turf. Larger rivals could beat fuboTV to the punch. Subscriber growth can slow in this competitive niche. FuboTV is far from perfect, but it would be a mistake to bet against this rapidly ascending media stock right now.

Rick Munarriz owns shares of Roku and fuboTV. The Motley Fool owns shares of and recommends Roku. The Motley Fool recommends fuboTV. The Motley Fool has a disclosure policy.

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