For those who haven't heard of fuboTV (FUBO -2.88%), it is a sports-centric alternative to cable TV. The company benefits from the long-running tailwind of consumers cutting the cord on cable. Streaming choices are often less costly and a more convenient way to get your content nowadays.
The company has experienced booming revenue and customer acquisitions. Yet the stock is under significant pressure as investors grow wary of unprofitable growth stocks. Let's look more specifically at its growth figures and detail what could be causing the crash in fuboTV's stock price.
FUBO data by YCharts.
Playing with giants and winning
In its most recent quarter, which ended Dec. 31, fuboTV reported revenue of $230 million. That was 120% higher than what it generated in the same period the year before. That's impressive considering people were spending a lot more time indoors at the same time in the comparable period a year ago. Similarly, revenue for the year ending Dec. 31 increased by 144% from the year earlier.
Surging revenue growth is fueled by robust customer acquisition. As of Dec. 31, fuboTV had 1.3 million subscribers, a 140% year-over-year increase. Of course, fuboTV is not the only company offering a streaming alternative to cable TV. It's facing stiff competition from powerful foes, including Alphabet's YouTube and Walt Disney's Hulu. Still, fuboTV grew 2.75 times faster than the overall market in the fourth quarter.
One reason fuboTV has achieved success is its sports focus. Many people who sign up for live TV services do so for sports. It's the one category of content severely lacking in non-live TV streaming services like Netflix and Disney+. Editors at CableTV.com, a website guide to cable and streaming providers, picked fuboTV as the top streaming choice for sports fans. Still, the rights to air sports programming are expensive, which leads us nicely to why fuboTV's stock is crashing despite booming revenue.
Image source: Getty Images.
Expenses are outpacing revenue
Sure, fuboTV's revenue is proliferating, but expenses are ahead of it. In the quarter ended Dec. 31, fuboTV reported a loss of $112 million on the bottom line. That improved from a loss of $195 million in the same quarter the year before, but a massive loss nonetheless. The story was similar when looking at the whole year's results: $383 million for 2021, down from a $610 million loss the prior year.
FUBO revenue (quarterly). Data by YCharts.
The figures highlight that fuboTV is not generating enough sales to cover its costs. Its most considerable expense is related to subscriber content, suggesting it offers consumers an affordable price to attract subscribers. Investors do not love this strategy, which partly explains why the stock is falling so hard.
So fuboTV might need to raise prices eventually or reduce the amount of content it offers, which could substantially slow subscriber growth. But it may be necessary if the company wants to turn the stock around and stem the losses on the bottom line.
