It's easy to see why Walt Disney (DIS +0.72%) is one of the most popular holdings among active investors on the Robinhood Markets platform. The media giant has something for everybody. If you're a fan of Marvel superheroes, Star Wars, or the world's most visited theme parks there's already an affinity for Disney's handiwork. It's one of the 10 largest investments on Robinhood.
Less widely owned but still making the platform's list of 100 most popular holdings is fuboTV (FUBO +0.00%). The live TV streaming service has fumbled the ball when it comes gambling, profitability, and Wall Street success. It's still attractive to Robinhood traders, possibly given its low share price and heady growth.
Why are Robinhood investors taking big stakes in Disney and fuboTV? Let's take a closer look.
NYSE: DIS
Key Data Points
1. Disney
The House of Mouse is rocking right now. The stock chart just doesn't know it yet. Shares of Disney are rallying these days, but they're still just a little more than half the price they were 22 months ago.
Disney is naturally in much better shape on most fronts than where it was two years ago. Its latest theatrical release -- Avatar: The Way of Water -- just became the first movie since 2019 to top $2 billion in ticket sales worldwide. Disney's theme parks segment is generating record results, and with China finally reopening it can get an incremental boost from its sizable minority stakes overseas. Oh, and Disney also got Bob Iger back as its CEO.
Image source: Getty Images.
What's holding back Disney right now? Losses are widening at Disney+ despite the scalable nature of the premium streaming video business. The segment posted an operating loss of $4 billion in fiscal 2022, including a nearly $1.7 billion deficit in its latest quarter. There are also concerns of how a consumer-facing giant that relies on ad revenue, subscriptions, tourism, and free-spending folks in general will hold up in a global recession.
The long-term outlook is promising. Analysts see earnings nearly tripling in five years. The content flywheel that fuels everything from consumer products to theme park attractions to TV shows when a franchise hits its mark will keep spinning faster.
NYSE: FUBO
Key Data Points
2. fuboTV
Disney isn't the only company on the radar of Robinhood investors with an inability to crack the code when it comes to turning a profit in streaming video. The difference here is that it's the only thing holding fuboTV back.
Growth isn't a problem. There were 1.23 million North American subscribers at the end of 2022, a 31% increase over the past year. Revenue rose 40% in fuboTV's home turf in its latest quarter, up 44% overall as it starts to make a push overseas with its sports-heavy approach to replacing traditional cable and satellite TV.
At the stock's peak in late 2020 fuboTV had dreams of running an online sportsbook and offering predictive fantasy games to its sports-obsessed viewers. It recently decided to take its chips off that table, and Wall Street applauded the move as a sign of fiscal maturity. The path to profitability is still complicated at fuboTV, and it's why the stock is trading 96% -- yes, 96% -- below its all-time high.
The company is competing against tech and media giants, and pricing power is limited in this cutthroat niche. It has excelled at getting advertisers to pay up for access to its demographically desirable target audience, and that's $7.37 a month in ad revenue per user on top of its pricey subscription premiums. Ad revenue has weakened for connected TV, but that's just another reason why fuboTV can break out of its trading lull if it can turn its bottom line around as one of the riskiest media stocks on the market.
