Cable and satellite television are so 2019. We're streaming these days, and that means replacing traditional linear TV with a more flexible digital format to keep watching live sports, local news, and major network broadcasts in real time. You've probably heard of Sling TV or Alphabet's (GOOGL 2.34%) (GOOG 2.28%) YouTube TV, popular live-streaming services with millions of subscribers apiece.
Most consumers (and investors for that matter) don't really know fuboTV (FUBO +0.00%), but that could be changing. The cloud-based live TV platform only had 590,430 subscribers by the end of March, but there's a lot going for the upstart these days. No streaming service is growing as quickly as fuboTV; generating the same ad revenue per user; and arming itself with the same kind of retention, engagement, and monetization tools that fuboTV is working on right now.
The stock also has momentum on its side. It has nearly doubled since hitting a springtime low two months ago. The potential returns are high, but the same can also be said about the risks. Is fuboTV a millionaire maker stock? Let's take a closer look.
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TV or not TV?
When folks cut the cord, the assumption is that they will transition their viewing diet to the popular streaming services that charge between $5 and $15 a month for access to a catalog of proprietary on-demand content. But that still leaves a void for live sports, local news, and the dozens of channels that they used to get with their old cable or satellite TV plans.
YouTube TV, Hulu+ Live TV, and Sling TV are some of the better known streaming services that provide roughly 100 channels of real-time content and cloud-based storage to "record" content that subscribers want to watch later. FuboTV is a small player in this niche, but its focus as a sports-first platform has armed itself with fans of live sporting events that tend to spend a lot of time watching TV.
FuboTV may have fewer than 600,000 premium subscribers on its platform, but they're watching an average of four hours a day through the service. Unlike traditional services that often average single digits in monthly revenue per paying subscriber, the average revenue per account for fuboTV is $69.09 a month. The lion's share of that comes from the premium subscriptions, but advertising revenue per user is clocking in at a whopping $7.11 a month, a 57% increase over the past year.
The engagement is real, and marketers are hungry to reach fuboTV sports buffs. Could it get better? Maybe the better question to ask is if it could get bettors.
FuboTV has sports fans where it wants them for several hours a day, and it knows that enthusiasts are willing to bet money on their league acumen. Later this summer, it will be offering a fantasy sports element to its service where viewers can enter contests and win prizes for in-game predictions. By the end of this year, fuboTV expects to have a full-blown sportsbook for viewers to wager on games where it is legal to do so.
Fantasy sports and gambling are major differentiators for fuboTV. Rival services also offer dozens of channels of live TV sports, but they are owned by much larger companies that will face brand and shareholder pressure not to "gamble" on online wagering.
Growth is accelerating. Revenue has posted year-over-year bursts of 71%, 98%, and 135% in its first three quarters as a public company, respectively. It's not the only thing picking up the pace these days. The stock has soared 97% since hitting a near-term low in May.
There is a lot going for the company right now, and you won't find too many other media stocks growing faster these days. The risks are high, especially if live-streaming services price themselves out of mainstream viability. However, you have to admire fuboTV's ability to offer a differentiated product in a niche that many see as a commodity. FuboTV is a millionaire maker stock.
