fuboTV (FUBO -1.67%) reported third-quarter earnings on Nov. 9 that disappointed investors -- and the stock has since slumped over 25%. The sports streaming substitute for cable TV is gaining traction with consumers, but that's not the problem for investors.

Instead, the issues arise from fuboTV's profit margins -- or lack thereof. It's losing money at a rapid rate and keeps raising capital that is diluting shareholders. Let's look closer at two reasons the market is concerned about fuboTV. 

A couple watching television.

fuboTV's stock crashed after the company posted impressive revenue growth in Q3. Image source: Getty Images.

1. fuboTV is operating at a loss on the bottom line 

On the positive side, fuboTV saw revenue jump 156% to $157 million in the latest quarter over the year-ago period. No doubt, that's impressive growth. However, where investors are raising concern is the cost of that growth.

For the quarter, fuboTV lost $106 million on the bottom line. Those are heavy losses. Indeed, expenses as a percentage of revenue were 165.5%. The bulk of those costs was subscriber-related expenses (at 91.5% of revenue). With each new subscriber, fuboTV needs to pay media companies like Disney.

The excellent news for fuboTV is that these costs are getting smaller as a percent of revenue as the company grows. Subscriber-related expenses were 100% of revenue in Q3 last year and 122% two years ago. Still, these are variable costs, meaning they increase with each additional subscriber, so it doesn't scale as well as fixed costs, which stay the same regardless of customer or revenue growth.

The costs are adding up, and in the nine months ended Sept. 30, fuboTV lost $143 million in cash from operations. That's nearly twice as much as the $72 million it lost in the same time last year.

2. fuboTV's net losses are diluting shareholders 

To sustain those losses, fuboTV is tapping capital markets and raising money. In the most recent nine months ended Sept. 30, the company raised $389.5 million in cash by selling convertible notes. Additionally, it has raised $71.8 million by selling shares of its stock to the public. As a result, fuboTV had $398.5 million in cash at the end of its third quarter.

This means that fuboTV's share count is rising. As of Sept. 30, it had 142.5 million shares outstanding. That's up from 44.2 million at the same time last year. Note that with more shares outstanding, a company's profits are split more broadly. For instance, a hypothetical $100 million in net profit would come to $2.26 in earnings per share at 44.2 million shares outstanding. The same net profit would come to just $0.70 per share with 142.5 million shares outstanding.

With fuboTV's losses continuing, investors are perhaps foreseeing that the company might need to sell yet more shares to sustain this level of growth. So despite fuboTV's impressive revenue growth, the market seems to believe that a positive and growing bottom line remains key.