FuboTV (FUBO) has had a turbulent journey since its IPO in 2020. Initially priced at $10 per share, the stock was down by 90% at one point, falling to just above $1. While FuboTV achieved strong growth in subscribers and revenues over time, it struggled with massive losses as competing with industry giants proved highly costly and challenging. This led to continued dilution that deteriorated shareholder value. However, the recently announced deal with Disney has shifted the narrative and resulted in massive share price gains over the past few days. This groundbreaking agreement is set to redefine Fubo’s future, making it a much stronger contender in the industry. Thus, I am bullish on FUBO stock.
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What This Deal Is All About
Earlier this week, FuboTV and The Walt Disney Company (DIS) revealed a transformative partnership: Hulu + Live TV will merge with FuboTV under a new entity. Disney will own 70% of this entity, leaving current Fubo shareholders with the remaining 30%. This move resolves prior litigation between Fubo and a joint venture involving Disney, Fox, and Warner Bros., which Fubo basically argued was anti-competitive.
The legal settlement now ends a feisty chapter and ensures the new venture has a solid footing moving forward while ensuring that FuboTV ends up well-capitalized. Disney and its partners have agreed to pay FuboTV $220 million as part of the settlement. Furthermore, Disney will extend a $145 million operational loan in 2026. These terms provide immediate relief to FuboTV’s previous liquidity problems and position the company for sustained growth without additional dilution.
Notably, the scale of the deal is monumental, especially for a company the size of fuboTV. Hulu + Live TV brings a subscriber base of 4.6 million, while Fubo contributes 1.6 million, creating a combined total of 6.2 million subscribers. On top of that, the combined annual revenue is projected to reach $6 billion, seriously improving the company’s ability to compete with industry giants like YouTube TV. It seems that Disney’s decision to structure the deal this way is quite strategic, in my view, as Hulu + Live TV was a smaller piece of its broader portfolio that can now come to life. In the meantime, FuboTV’s management will oversee the new entity, allowing Disney to focus on its core segments.
Why the Deal Changes Everything for Fubo
Now undoubtedly, this whole partnership/settlement makes for a key shift for FuboTV. The company has long struggled with the challenges of being a smaller player in a brutally (and that’s an understatement) competitive industry. The deal with Disney eliminates its previous existential threats and simultaneously unlocks remarkable opportunities for growth.
First, the integration with Hulu + Live TV offers economies of scale that were previously out of reach for Fubo. Scale is critical in the streaming industry, where profitability often hinges on spreading costs across a large subscriber base. With a combined revenue projection of $6.5 billion in 2026 and substantial cost synergies, the new entity can deliver stronger margins and sustainable growth. Another aspect, and the most interesting one, in my view, is that Disney’s substantial stake also has a vested interest in ensuring the venture succeeds. In other words, FuboTV went from fighting alone to having a behemoth for an ally.
Financially, the deal changes FuboTV’s balance sheet rather dramatically. Following the upcoming cash injection I mentioned earlier, the company shifts from a net debt position of $171 million to a net cash position of $49 million. Interest expenses will stop hampering profitability, while FuboTV will finally have the liquidity needed for investments in technology, content, and marketing. Also, the deal broadens Fubo’s content library through Disney+, ESPN+, and Hulu’s extensive offerings essentially at “$0 cost,” creating a more compelling value proposition for subscribers. This should help accelerate subscriber acquisition while potentially boosting average revenue per user (ARPU), as the broader catalog can more easily justify price hikes.
Is FuboTV a Good Stock to Buy Today?
Given how recent the news is and how abruptly the stock has surged in the meantime, I’d recommend not putting too much faith in the current Wall Street estimates, as they haven’t been updated yet. Specifically, FUBO stock is now rated as a Hold, with analysts giving it two Buys, five Holds, and one Sell over the last three months. The average price target for FUBO is $3.91, which suggests a potential downside of 26.92%. However, Wall Street analysts haven’t adjusted their price targets to reflect the latest developments.
Nevertheless, for top-tier advice on buying or selling FUBO stock, check out Laura Martin, who represents Needham. She is the most accurate and profitable analyst covering the stock over the past year, boasting an outstanding average return of 35.68% per rating despite her not-so-impressive 42% success rate.
Final Thoughts
Summing up, I firmly believe that FuboTV’s partnership with Disney is nothing short of transformative. It resolves longstanding challenges, eliminates existential risks, and positions the company for sustainable growth. With a stronger balance sheet, economies of scale, and access to Disney’s vast content catalog, FuboTV is now far better equipped to compete in the streaming industry. For this reason, I’m taking a bite and staying bullish on the stock.
