FuboTV (FUBO) is a US leading sports-first live TV streaming platform. The company offers 100+ live TV channels and OTT-originated features across sports, news, and entertainment that can be streamed through smart TVs, mobile phones and tablets, and computers. The company reached one million subscribers last quarter amid the acceleration of cord-cutting. However, the stock has plummeted 65% from its all-time high and we believe the drop is overblown.
During the last quarter, the company reported record revenue of $157million which represents a whopping 156% year-over-year growth. Advertising revenue is up 147% year-over-year to $18.6 million and viewership hours reached record highs of 284 million hours during the quarter. FuboTV’s sports-first approach differentiates a company from other streaming companies such as Netflix (NFLX), HBO (T), and Curiositystreams (CURI). The companies all-rounded live sports TV portfolio provide a moat as other companies are not able to provide such an amount of content.
Besides, unlike Netlflix which only relies on subscription revenue, FuboTV also earns revenue through ad sales and sportsbooks. As mentioned advertising revenue skyrocketed with average revenue per user also increasing by 10% year over year. Ad sales now account for 12% of the total revenue and it provides a significant contribution to margin expansion. The company is also starting to offer sportsbooks products that integrate with FuboTV’s platform. They already partnered with NBA and MLB and are poised to grow quickly as more states legalize sports betting.
At the current stock price, the company is trading at a 2021 price to sales (p/s) ratio of 4.4 which is quite cheap given how quickly the company is growing. Margins are still low at the moment but we believe as ad sales grow further and the sportsbook segment starts to generate meaningful revenue, margins will further expand. With the cord-cutting trend accelerating and sports betting in the country starting to take off, FuboTV is having multiple tailwinds that will help the company grow exponentially. Therefore we believe the stock is a buy after being hammered and the company will dominate the live tv streaming sector in the near future.
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