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Why fuboTV Stock Plunged on Friday

By Danny Vena – Aug 13, 2021 at 5:42PM

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Existing shareholders are about to get diluted.

What happened

Shares of fuboTV (FUBO -6.52%) traded lower on Friday, with the stock falling as much as 10.1% earlier in the session, ultimately ending the trading day down 8.7%. The streaming video specialist slumped when the company revealed plans to sell $500 million worth of stock. 

So what

The news wasn't well received by current investors. With a current market cap of roughly $4.08 billion, the sale could represent dilution of 12.5% for existing shareholders. While seeing the value of your investment diluted is never fun, the potential for a secondary offering shouldn't be a surprise to those who follow fuboTV.

Group of young adults smiling and laughing while watching television and eating popcorn.

Image source: Getty Images.

Soon after its IPO in early October, fuboTV launched a secondary offering of nearly 10 million shares, then representing 15% of the company's common stock. That offering was held to allow early investors and company insiders to sell shares. This was followed by a deal in January to offer roughly 32 million shares in exchange for its convertible preferred stock. 

Now what

The news isn't all bad. fuboTV announced record-setting second-quarter financial results on Tuesday. The streaming platform reported record total revenue of $130.9 million, up 196% year over year, partially fueled by ad revenue that grew 281% to $16.5 million. At the same time, paid subscribers soared 138%. 

As a result of its stellar performance, management raised fuboTV's full-year revenue guidance to $565 million, which would represent 116% growth at the midpoint of its guidance, up from its prior estimate for a 101% increase. The company also expects its subscriber count to climb to 915,000, up 67% year over year. 

fuboTV is a high-growth streaming service spending furiously to fuel the insatiable appetite of its viewers for additional content. This likely won't be the last stock sale.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool recommends fuboTV, Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

fuboTV Stock Quote
$2.58 (-6.52%) $0.18

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