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Why fuboTV Stock Fell More Than 12% This Week

By James Brumley – Aug 20, 2021 at 3:19PM

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The profit-taking potential was just too great for investors to pass up, particularly in light of impending dilution.

What happened

Shares of virtual cable television service provider fuboTV (FUBO -0.71%) are down 12.5% for the week heading into Friday's market close. The loss extends selling that materialized in the middle of last week following the stock's surge in response to an impressive second-quarter report.

So what

At first glance, this week's sell-off is attributable to fuboTV's decision to sell more shares of its stock. Last Thursday, the company filed to sell as much as $500 million worth of equity, and though it's not committed to a total dollar figure or time frame for this fundraising effort, it still represents potential dilution of the $3.7 billion company's float.

Falling blue stock chart.

Image source: Getty Images.

It's likely the pullback was going to materialize regardless, however. The stock had soared 11.1% on Wednesday of last week following the release of second-quarter numbers, closing 26% above where it was just a week earlier. Q2 revenue jumped 196% year over year to $130.9 million thanks to the addition of 91,291 subscribers during the period, which brought the total to 681,721. A year earlier, that figure was about 286,000 paying customers. Advertising revenue nearly tripled year over year, reaching $16.5 million for the three-month stretch ending in June. But, as is so often the case, investors realized after the fact they had pushed the stock too far, too fast.

Now what

None of this is new or surprising to any investor that's kept tabs on fuboTV, of course. This is a company that was well positioned for the pandemic's effects, but only caught the attention of most investors once the coronavirus sparked shutdowns. It's been wildly volatile ever since. The volatility is abating despite this week's stumble, though, allowing more prospective buyers to give it a serious look.

And they should indeed give it a look. This company is not only capitalizing on the cord-cutting movement with a cheaper streaming alternative, but fuboTV's sports-minded packages are also proving to be a hit. The company's plans to integrate its service with sports-betting tech from Vigtory's sportsbook platform is just one of several ways it will be able to bolster its reach within the cable television market.

It's a long-term project to be sure. But this week's pullback is an entry opportunity for investors that can stomach the volatility that's yet to be fully wrung out from this stock's trading action.

James Brumley 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
$2.81 (-0.71%) $0.02

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