- FuboTV has recently issued robust Q2 metrics
- Investors are pleased about the upcoming launch of the Fubo Sportsbook app
- We’re bullish on FUBO stock, which could move toward $35 in the coming weeks
- Advertising – revenue of $16.5 million, up 281% YoY;
- Subscription – revenue of $114.4 million, up 189%.
- Roundhill Streaming Services & Technology ETF (NYSE:SUBZ): This new fund is flat since inception in February 2021. FUBO stock’s weighting is 3.60%;
- SPDR® S&P Internet ETF (NYSE:XWEB): The fund is up 9.1% YTD, and FUBO stock’s weighting is 1.89%;
- iShares Virtual Work and Life Multisector ETF (NYSE:IWFH): The fund is down 6.3% YTD, and FUBO stock’s weighting is 0.88%.
Investors in the sports-focused streaming platform FuboTv (NYSE:FUBO) have had a choppy year so far. Year-to-date, FUBO stock is up about 4%. However, the shares have lost more than 53% since December 2020, when they hit an all-time high of $62.29. FuboTV’s market capitalization stands at $4.1 billion.
The New York-based FuboTV was launched in 2015 to stream mainly soccer games (football for non-U.S. readers). It went public in October 2020.
Subscribers to the platform have access to live sports events as well as entertainment and news content. The company’s advertising segment has also been growing. In addition, Wall Street is expecting the company to launch its sports book app, which would combine streaming services with online gaming and betting.
The company announced robust Q2 figures on Aug. 10. Total revenue increased 196% year-over-year to $130.9 million. Management reports revenue in two main segments:
In addition, the monthly average revenue per user (ARPU) went up by 30% to $71.43. Investors were pleased that FuboTV added 91,291 net subscribers in the previous quarter.
On the results, CEO David Gandler said:
“FuboTV delivered a strong second quarter of 2021 across all of our key financial and operational metrics: subscribers, total revenue and advertising revenue.”
Finally, management raised guidance. For the full year, FuboTV now expects to generate $565 million in revenue, an increase of 116% YOY.
What To Expect From FUBO Stock
Among seven analysts polled via Investing.com, FuboTV stock has an ‘outperform’ rating. The shares have a 12-month price target of $43.86, implying a return of about 50% from current levels.
Chart: Investing.com
The stock's P/S and P/B ratios stand at 9.91x and 6.65x, respectively. By comparison, the P/S and P/B ratios of the streaming giant Netflix (NASDAQ:NFLX) are 9.13x and 18.17x.
Investors who watch technical charts might be interested to know that an up move toward the $31 to $35 level is likely. In that case, FUBO stock would possibly hit resistance between $34-$35 after which it could trade sideways between $30 and $35.
We should also note that the beta (β) of FUBO stock is 2.93. Beta is a measure of a security's volatility in relation to the overall market.
A company whose β is greater than 1, means it's more volatile than the market. With a beta of 2.93, the stock will likely be about three times as volatile as the overall market. In other words, expect swings in the FUBO share price, especially in the short run.
Although our expectation is for the stock price to increase in the coming weeks, it is not likely to be a straight move higher. There could even be a further decline toward $28 before a new upleg starts. In case of such a decline, potential FuboTV investors would then find better value in the stock.
4 Possible Trades
1. Buy FUBO Stock At Current Levels
Investors who are not concerned with daily moves in price and who believe in the long-term potential of the company could consider investing in FuboTV shares now.
FUBO stock closed yesterday at $29.56. Buy-and-hold investors should expect to keep this long position for several months while the stock potentially makes an attempt, first toward $35, and then $40, leading to a return of about 35%.
However, investors who are concerned about large declines might also consider placing a stop-loss about 3-5% below their entry point. We should also note that it will possibly take several quarters before the shares could reach the previous ATH of $62.29.
2. Sell A Cash-Secured Put Option On FUBO Stock
Our second trade involves a cash-secured put strategy. We have recently covered this option in numerous articles. Here is one example.
Bullish FuboTV stock traders could now sell a Nov. 19, 28-strike put option, which is currently being offered at $3.58.
Assuming traders would enter this put-selling strategy at the current price, the upside is keeping this premium of $358 as long as FUBO stock closes above $28, when the option expires. A total of $358 would be the maximum return for this trade (excluding trading costs and taxes).
The downside is if FuboTV stock trades below $28.00 ahead of expiration. Should that occur, traders could be assigned 100 shares for each sold put at a cost of $28.00 per share.
At expiry, this trade would break even at a stock price of $24.42 (i.e., $28-$3.58).
3. Buy An ETF That Has FuboTV As A Holding
Many readers are familiar with the fact that we regularly cover exchange-traded funds (ETFs) that might be suitable for buy-and-hold investors. Thus, readers who do not want to commit capital to FUBO stock but would still like to have exposure to the shares could consider researching a fund that holds the company.
However, since FuboTV is a small, young company, it is not yet a leading holding in an ETF. This means such an investment would provide only a limited exposure to FuboTV shares.
Nonetheless, examples of ETFs that have FUBO stock include:
4. Buy Shares In Another Streaming Company
Potential investors who are interested in the streaming space, including audio and video entertainment, and want to invest in FUBO stock could consider investing in other more established names in the sector.
The pandemic has pushed streaming service subscriptions in many firms to records highs. However, as economies open up, a number of these stocks have come under pressure and, thus, their share prices are off their 52-week, or even ATH highs.
Several names with streaming revenues that could appeal to readers are (in alphabetical order):
Apple (NASDAQ:AAPL): up 16.5% YTD;
AT&T (NYSE:T): down 5.2% YTD;
Comcast (NASDAQ:CMCSA): up 16.6% YTD;
Curiositystream (NASDAQ:CURI): down 9.9% YTD;
Netflix (NASDAQ:NFLX): up 5.2% YTD;
Roku (NASDAQ:ROKU): up 12.1% YTD;
Sirius XM (NASDAQ:SIRI): down 0.87% YTD;
Spotify (NYSE:SPOT) : down 24.8% YTD;
ViacomCBS (NASDAQ:VIAC): up 11.2% YTD
Walt Disney (NYSE:DIS): up 1.3%.
As the returns above highlight, the fortunes of these companies have varied significantly in 2021. Therefore, potential investors would need to research them well before committing capital into the shares.
Bottom Line
Since going public in late 2020, FUBO stock has been in the limelight. Although the record high share price of $62.29 seems quite distant now, the company is likely to create better shareholder value in the months ahead. Rising subscriber numbers and the growth in the advertising segment, as well as the upcoming sports book app will likely provide tailwinds for FuboTV shares. Meanwhile, the company could even find itself a takeover candidate.