The market can be a fickle beast. Shares of fuboTV (FUBO -2.69%) soared two years ago as the live-TV streaming service made moves in late 2020 and early 2021 to cash in on sports gambling. The stock moved higher this week after the service announced it was pulling its chips from the table on that front.

Starting lines matter, of course. fuboTV stock hit an all-time high of $62.29 over the holiday season of 2020 as investors got excited about the upside of a sports-centric streaming service integrating fantasy sports and sportsbook features into its platform. Today a share of fuboTV can buy a Happy Meal. There's also more to the stock's initial but ultimately unsustainable pop on Tuesday, as it did issue encouraging preliminary results for the third quarter. Let's draw up some X's and O's to see how the market's playbook interpreted the fuboTV news.

Four friends watching a football game on TV.

Image source: Getty Images.

Calling an audible on the line

fuboTV shares opened 14% higher on Tuesday and were up as much as 17% before giving back nearly all of those gains. The stock would close with with a gain of less than 2% for the day. 

The market's initial euphoric reaction seems ill placed. It was one of the market's biggest winners in early August -- briefly more than tripling by midmonth -- after announcing that it was exploring strategic alternatives for its sports wagering business. fuboTV had rolled out contests wherein viewers of live sporting events would guess on near-term outcomes in exchange for service prizes. This was supposed to be a gateway drug for the more lucrative sportsbook it was hoping to roll out, but as a poorly capitalized player in a game where getting through the regulatory hoops requires patience and financial fortitude, it realized that it might need somebody else to handle the logistics. 

Investors cheering in August were hoping for a major player in the gambling world to step up, run the business, and cut fuboTV a check for a piece of the action. This week's news is something else. There were some parties interested in taking on fuboTV's gaming business, but none of them offered the fledgling service the ability to lower its funding requirements and generate sufficient returns to its shareholders. It is ceasing operation of its owned-and-operated Fubo Sportsbook division.

It wasn't all bad news. fuboTV announced preliminary North American revenue for the third quarter of at least $210 million, a 34% gain and landing just above the $200 million to $205 million it was projecting over the summer. The $5.5 million it expects to report outside of North America -- when it officially posts its third-quarter results on Nov. 4 -- is dead center of the range it initially proposed. 

North American subscribers of 1.22 million is a 27% year-over-year increase, also topping its earlier guidance. The news isn't so great as we work our way down the income statement, but fuboTV believes its performance and pulling the plug on Fubo Sportsbook have it on track to generate positive cash flow by 2025. 

A lot can happen in the next three years, and fuboTV is still small fry in a world of giant streaming service stocks. The thesis has changed, and some of the more exciting sports-related upside that made the service stand out is gone. Growth has also slowed, following a 70% year-over-year increase last time out and consistent triple-digit surges before that. 

This doesn't mean that fuboTV is losing the game. In football-speak, it's just replacing a quarterback who has a rocket for an arm but weak accuracy with a game manager in the pocket who can nail the short throws to keep the sticks moving. It's not exciting, but it's an easier way to score.