It's not exactly hyperbole to say fuboTV (FUBO -0.75%) hasn't lived up to the hype. Shares that were once priced at more than $62 in late 2020 are now trading at less than $2. The streaming outfit remains in the red and obviously hasn't upended the conventional cable TV industry.
And yet, there's a bullish case to be made here -- made even stronger by the severity of the stock's implosion.
A closer look at fuboTV
FuboTV is a cable-TV company, sort of. Rather than delivering its signal through the typical coaxial cable, fuboTV streams cable content via an internet connection. It's a sports-centric service, but its key selling feature is its price. Plans start at $75 per month, and its service largely sidesteps the usual local taxes and fees that otherwise make cable TV less affordable.
And consumers are certainly finding it. As of the first quarter, there were nearly 1.3 million U.S. paid subscribers with another 379,000 overseas tuning into a platform localized for them. They collectively generated $324 million of revenue in the first quarter of the year. That's not bad for a start-up.
Data source: fuboTV. Chart by author. Figures are in thousands.
Except that revenue isn't the same thing as profits. fuboTV remains in the red, suffering an $81 million operating loss in the first quarter. That unwound a recent swing to profitability and completely undermined once-lofty investor confidence in the company. Shares are down 97% in less than three years.
That selling could be largely rooted in the wrong information, though. Stocks should be priced based on where the company is going; this one is priced largely on where it's been. And there's your opportunity.
The long-term bull case
fuboTV is expected to remain in the red -- on the basis of generally accepted accounting principles (GAAP) as well as a non-GAAP basis -- at least through the next couple of years. It's making progress toward net profitability, however. That's something the bulls will eventually be able to latch on to.
Data source: Thomson Reuters. Chart by author. All figures are in millions of dollars.
And there's no reason to suspect fuboTV won't be able to reach analysts' revenue and earnings targets.
Yes, the cable TV industry is dying a slow death. But its decline is largely limited to the biggest of players, like Comcast's Xfinity and Charter's Spectrum, both of which now only offer steeply priced services bloated with lots of channels that go unwatched.
It's also arguable that the cable industry's oldest players are also at least partly subsidizing their internet infrastructure with their cable TV revenue.
fuboTV avoids both pitfalls. Its customers already have broadband internet service through a mainstream provider like Charter and Spectrum. As such, fuboTV has no infrastructure to build or maintain.
And while its channel packages are relatively slim compared to more mainstream cable TV platforms, fuboTV offers its customers the programming they want to watch the most.
That's sports, by the way. Numbers from CableTV.com indicate that nearly one-fifth of consumers continue paying steep cable bills for access to live sports broadcasts. That's the single-biggest reason they're sticking with it, in fact.
As for fuboTV's sports lineup, in addition to ESPN and ESPN2, fuboTV offers Fox Corporation's FS sports channels, the Golf Channel, the NFL Network, and more at no additional charge. Sports fans looking for more can pay extra for access to channels like the SEC Network or MLB.TV.
And fuboTV is willing and able to offer deals to fans of specific teams. Earlier this month, the company unveiled a partnership with the St. Louis Cardinals that offers game attendees an extended trial of its service, following last month's similar agreements with Major League Baseball's Cleveland Guardians and Boston Red Sox.
Worth a shot ... for certain investors
There's still much for fuboTV to figure out. Chief among its challenges is the company's small size and lack of profits. It doesn't have access to advertising budgets like the ones Charter and Comcast have to work with. That's going to keep a lid on growth.
But fuboTV is growing anyway even without a ton of promotional spending. Savvy consumers looking for the best deal that doesn't cut off access to their favorite programming are finding it.
So fuboTV is on the right path for the right reasons. The tricky part of owning the stock is just being patient enough to let the effort bear fruit. Fortunately, risk-tolerant investors might not have to wait until 2025 for the stock to perk up. The market has a knack for picking up on things like a swing to a profit well ahead of time.
And with the stock's current price representing less than half of per-share revenue and still trading near April's all-time low, chances are decent that fuboTV shares can continue building on May's rebound effort.
You just don't want to bet the entire farm (or your entire retirement) on it.
