fuboTV’s (FUBO) latest earnings release followed a familiar pattern; strong growth countered by more losses. It’s a formula which has proven to be a real turn off for investors. Shares shed 21% in the subsequent session, leading to a year-to-date decline of 81%.
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That said, this time around, even the sports-focused streamer’s customary growth did not quite match Street expectations; revenue more than doubled from the same period last year to reach $242.02 million, fractionally below the $243 million the Street was anticipating. There was a more conclusive miss on the bottom-line, however, as adjusted EPS of -$0.69 came in $0.16 worse off than the -$0.53 analysts had predicted.
Souring sentiment further, FUBO also lowered expectations for North American revenue and subs in 2022. The company now sees revenue in the region coming in the $1.02 billion to $1.03 billion range and showing 1.465 million to 1.485 million subscribers. Beforehand, FUBO was calling for revenue between $1.08 billion and $1.09 billion, and subscribers in the 1.5 million to 1.51 million range.
That said, Wedbush analyst Michael Pachter thinks it is not that but rather due to the “sizable profit losses” as to why investors have abandoned the stock. It might be a while for investor sentiment to turn positive again and will require “several quarters of strong performance” before that happens.
Can FUBO deliver those? Despite not expecting a “rapid reversal of cash burn and EBITDA losses,” Pachter thinks so, believing the company is “on track to grow sufficiently to become EBITDA positive.”
“Notwithstanding its precipitous share price decline, we think fuboTV is focusing on the right things,” the analyst explained. “Subscriber growth is continuing at a rapid pace, the company chose to increase price to better cushion itself against content cost escalation, and marketing spending is trending in the right direction as fuboTV is laser focused on the lifetime value of customers acquired, rather than growing its subscribers at any cost.”
Accordingly, Pachter’s rating stays an Outperform (i.e., Buy) although the price target is reduced from $15 to $9. However, such has been the share price’s drop, there is still upside of 209% from current levels. (To watch Pachter’s track record, click here)
What does the rest of the Street make of FUBO’s prospects? It’s a mixed bag; based on 5 Buys and Holds, each, plus 1 Sell, the analyst consensus rates the stock a Moderate Buy. However, most feel the shares are now severely undervalued; going by the $9.53 average target, they are anticipated to appreciate ~227% in the year ahead. (See FUBO stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
