fuboTV (FUBO -0.72%) is in a competitive market. But can the sports-focused streaming platform prevail in adding a sports betting component to its platform? In this clip from "IPO & SPAC Show" on Motley Fool Live, recorded on April 11, Motley Fool contributors Nicholas Rossolillo, Danny Vena, and Jason Hall discuss fuboTV's financials, growth, and challenges.
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Nicholas Rossolillo: Here's where fubo was IPO date October 7, raised $183 million via that public sale. IPO price went up 10% and then as the rest of 2020 progressed, and then early in 2021, that stock price skyrocketed and this ties in with what Jose was talking about just a few minutes ago on DraftKings (DKNG 0.59%). This is obviously its TV streaming platform. But the real exciting part that I think investors liked about fuboTV was the integration with the sports wagering on their platform. Nice revenue growth in 2020, big operating loss, and negative free cash flow. But the company was growing lots of new subscribers, and then fast-forward to 2021, another big jump in subscribers up to 1.3 million. Revenue more than doubled on an organic basis, excluding a couple of acquisitions they made. They released fubo Sportsbook. Introducing that sports wagering component on the platform. I think that's what had a lot of investors excited. But here's the reality with this company. Big operating losses and the balance sheet is not really what you want to see, I don't think, if you're looking at taking on a new investment in the fresh stock, $374 million in cash. They already have $316 million in debt and, based on the burn rate of cash, we're looking at this company having to raise some more liquidity either via a secondary offering of more stock, maybe raising via some more debt. I don't know. What do you guys think about fubo here? I think the story is interesting. Obviously, TV streaming is great. There's the sports betting component but the financials just don't align for me.
Jason Hall: One of the things that I am just challenged with fubo is unlike a lot of the other platforms, it doesn't own the content, and it's always going to be fighting that content battle and sports, which is something that it's really focused on. Even niche sports is hard and competitive and that's challenging and you don't want to be a company running out of money, burning cash with your stock down 80% from its IPO price looking to do a secondary. It's a challenging time right now to be this business.
Danny Vena: If you were looking for somebody to temper your lack of enthusiasm for this company, you're not going to find it here because I remember reading a story that said they raised their prices even though they lost TNT and TBS, which are pretty big draws for companies that are sticking to the streaming the cable option.
Hall: Well that's basketball too, TNT and TBS, a lot basketball and baseball.