The speculative market frenzy of early 2021 saw sports-focused streaming platform fuboTV (FUBO -8.21%) become a multibagger within a year, soaring from single digits to nearly $50 per share. Now at $10, the stock has given back most of its gains, and investors might be wondering what the future holds.

While nobody can answer that with certainty, a key element will be the ability to turn a profit, something the company is unable to do in its current state. However, it may be much easier to digest the risks at the stock's price today, and the upside could make it worth considering for your portfolio. Here's what you need to know.

fuboTV's platform is growing

Streaming platform fuboTV broadcasts live sports and television, offering more than 100 channels to its customers. Customers can watch entertainment and news, but sports is the service's primary focus, and it competes with other live services like Disney's Hulu or Alphabet's YouTube TV.

Group of sports fans watching an event on TV.

Image source: Getty Images.

Within the streaming space, fuboTV remains a relatively small player. It ended the third quarter of 2021 -- its most recently reported period -- with 944,605 active subscribers, a drop in the bucket compared to a company like Netflix with more than 200 million.

However, fuboTV's focus on live sports has created a niche that it's effectively filled if you go by subscriber growth. The company's subscriber base grew 108% year over year in 2021's third quarter -- and an impressive 39% over the second quarter of 2021.

User growth is improving the company's financials

The streaming industry is cutthroat competitive, and fuboTV doesn't have much pricing power. It must offer its services at the most competitive prices possible to try and bring in new users and is losing money as a result.

The company's expenses to license and broadcast content amounted to 145% of fuboTV's revenue alone in Q3 2019. When adding in sales, marketing, and other costs, the business spent a whopping 234% of its revenue.

However, fuboTV can spread those costs out among more users as it grows. Expenses were 207% of revenue a year later in Q3 2020, and they fell again to 165% in Q3 2021. The bad news is that fuboTV is still nowhere close to turning a profit, and this massive cash burn has a lot to do with why the stock has fallen so far from its highs.

Still, there's hope for the business to turn a financial corner for the better -- as long as subscribers continue picking up the service and expenses as a percentage of revenue keep falling. fuboTV has $393 million in cash on hand, so it should have sufficient capital to fuel the business for the immediate future.

Ad and sports betting could determine fuboTV's fate

To drive profit growth, fuboTV isn't leaning solely on its streaming service. Instead, investors should think of streaming as a mousetrap that draws consumers into the business to monetize them. If you look at fuboTV's business as a stand-alone streaming platform, I don't think there's much to be excited about for investors. Even Netflix struggles to generate positive free cash flow consistently.

The company is trying to add complementary, higher-margin revenue streams to the business to help get more money out of its users. The company already generates advertising revenue, but it remains a small part of the business. fuboTV did $156 million in revenue in Q3 2021, and just $18.5 million, or 12%, was from advertising. However, advertising revenue grew 147% year over year, and ad revenue per user grew 10% year over year, so investors should look for these to keep trending upward.

Additionally, fuboTV is in the process of launching an integrated sports-betting platform within its streaming service. Its sportsbook will let viewers interact with the streaming service in real-time, placing bets on the game they are watching live. It launched in Iowa in November, and the company will be pushing to bring its sportsbook to new markets in the future. Its sportsbook is in the very early stages, so while it's a critical part of a potential investment in fuboTV moving forward, investors will need to see how things play out over the coming quarters.

Investor takeaway

If advertising and the sportsbook can succeed, it could lower fuboTV's customer acquisition costs and help dramatically improve the company's financials. These are likely the keys for investors because there are far-better competitors in the space for investors to pick from as a stand-alone streaming platform.

But with a market cap of just $1.5 billion, the stock has a lot of potential upside if the company's plan succeeds. The sportsbook is a unique angle, and most of its competitors don't have anything to compete with it. While fuboTV will probably never challenge Netflix for the global streaming crown, it only needs to succeed in its niche to score big gains for investors.