Competition everywhere: FuboTV shares fall

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There doesn’t seem to be much news to justify a big drop in stakes FuboTV (NASDAQ:FUBO). If anything, the opposite is true. The live streaming company announced two contracts this week. First, it signed a multi-year transportation contract with the Spanish-speaking media company Hemisphere Media Group. And today she announced it would exclusive carrier the English Premier League in the Canadian market over the next three seasons. Nevertheless, FUBO shares have fallen by 7% in the last two days and have lost around 60% in value since the beginning of November.

Source: Lori Butcher / ShutterStock.com

In an attempt to support the shares, it announced a cable company for streaming preliminary results for the fourth quarter and 2021 January 10th. The leadership focused on two things. First, year-over-year revenue is expected to grow 138% to 140%, reaching $ 622 million to $ 627 million. Second, FuboTV expects to more than double the number of paid subscribers in 2021 and end the year with more than 1.1 million.

“Revenue and subscriber measurements are expected to exceed previously issued guidelines, resulting in a record quarter and year for FuboTV,” the statement said.

While this all sounds good, even when the final results are published, they may not stop slipping in FUBO stock. This is because something important is missing in FuboTV’s preliminary earnings results.

No profit, big problem

What is missing in the recent financial announcement of FuboTV is the talk of profit.

FuboTV published a greater than expected loss $ 105.9 million, or 74 cents a share, for the third quarter with revenue of $ 156.7 million. In the first three quarters of 2021, the company lost $ 271 million. While losses are declining from year to year, FuboTV does not expect a profit in the next few years.

my InvestorPlace colleague Will Ashworth, who was bullish on FUBO shares November, after announcing the results for the third quarter, admitted that the bull investment thesis collapsed. He wasn’t the only one caught offside. I took a small position in the FUBO stock after a September record and I lost a few thousand dollars.

FuboTV Investing before growth

FuboTV’s $ 65-a-month live TV streaming service has a lot of competition. Those who immediately come to mind are Alphabet (NASDAQ:GOOGL) YouTube TV, ViacomCBS ‘ (NASDAQ:VIAC) Pluto TV in Walt Disney (NYSE:DIS) Hulu.

However, FuboTV has many sports channels that competitors do not offer. These include English-language channels such as BeIN Sports, and Spanish-language channels such as Universo and TUDN, which show football. It also offers some regional sports networks at an additional cost. However, it still does not have a transport agreement Sinclair Broadcast’s (NASDAQ:SBGI) Bally Sports, the largest owner of regional sports networks.

Like most growing companies, Fubo invested ahead of growth. In the fourth quarter, bought Balto Sports, a startup that develops tools for fantasy sports games. FuboTV CEO David Gandler described the purchase as a key first step in the online sports betting market.

The acquisition of Balto Sports will allow us to build a first-class free experience that will bring consumers the best games around live sports. From there, we see a natural advance in real money betting in regulated markets that complement fuboTV live streaming video for a very engaging user experience within our platform.

Fubo also bought a Paris-based Molotov-based streaming platform in December, hoping to stimulate international growth. Molotov has about 4 million viewers in its two services. A deal worth $ 190 million 85% stock.

Want to bet?

What’s most exciting for FUBO stock investors is probably the Fubo Sportsbook, an online betting app that launched in Iowa in early November and is now live in Arizona as well.

So far, 18 countries have legalized online sports betting New York is the last. In addition to Iowa and Arizona, Fubo has won market access contracts in three other states: Pennsylvania, Indiana and New Jersey.

However, big investors have embittered mobile sports betting. Hedge fund manager Jim Chanos, for example, recently said it was short DraftKings (NASDAQ:DKNG), marked his business model as wrong. Others expect bankruptcies in space due to high customer acquisition costs and competition.

FUBO shares were caught in a downward trend that affected all sports betting shares, including DraftKings, Penn National (NASDAQ:PENN) in Caesars Entertainment (NASDAQ:CZR). It also faces competition from Sinclair, which now wants to stream its regional sports networks with the Bally Bet app launched last year.

Oh, and if you want another reason to worry, Sam Rattner, who sold his Vigtory sports betting app to FuboTV 10 months ago, resigned from Fuba earlier this month.

Bottom Line on FUBO Stock

FUBO shares broke down without a dramatic increase in short-term interest. At the end of December, around 15.2% of shares were missing, which is less than in the previous reporting period. Today, short-term interest rates are around 16%.

Playing sports betting will cost a lot of money. Analysts expect rapid consolidation. Caesar has the money to compete, as she has launched a large-scale national TV advertising campaign in early August. Its shares have remained roughly since then, while the FUBO share price has fallen by half.

FuboTV could still be good, but there is more risk in its shares now.

On the day of the announcement, Dana Blankenhorn held a long position in FUBO. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.

Dana Blankenhorn has been a financial journalist since 1978. His latest book is The technological big bang: yesterday, today and tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle Store. Follow him on Twitter at @danablankenhorn.

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