fuboTV (FUBO) is a live streaming platform that provides a wide range of entertainment, news, and sports channels to its customers around the world. In Q3 of 2021, fuboTV garnered 945 thousand subscribers and generated $157 million in revenue.
It was featured in the Forbes list of Next Billion Dollar Startups in 2019. Although it started as a sports-related streaming service provider, it has expanded to become an all-encompassing platform. The platform offers three subscription-based packages to its customers with over 100 channels for cordless viewing. The company is currently operating in Canada, U.S., and Spain, with plans to acquire Molotov in France.
I am bullish on fuboTV as it has strong growth potential and massive upside to its consensus price target from Wall Street analysts. On top of that, its forward enterprise-value-to-revenue multiple is quite low given how much growth potential the company has, and Wall Street analysts are mostly bullish on the stock.
Strengths
In 2019, FUBO had a market share of less than 3% in the virtual MVPD market. However, now that market share is between 5.5% and 5.8%. In addition to offering 100+ channels, the streaming platform also provides approximately 500 hours of storage, a seven-day trial period, 4K HDR viewing, and flexible monthly packages.
The platform started in 2018 as a sports streaming service but has since expanded with the additional feature of allowing users to multi-view through four separate screens. The company is also expected to capture 3% to 5% of the LG market – a company that sold almost 26 million televisions in 2020.
Recent Results
In Q3 of 2021, FUBO reached the one-million mark in terms of subscribers, with revenue reaching $156.7 million. The total growth in subscribers and revenue amounted to 108% and 156%, respectively. Its viewership hours were also at an all-time high of 284 million hours, a 113% year-over-year increase.
Compared to Q2, the revenue has slightly gone down; the total revenue in Q2 was up by 196%, while new subscribers grew by 138%.
Valuation Metrics
FUBO stock is difficult to value right now, given that it is not profitable. That said, it trades at just a 2.4x forward enterprise-value-to-revenue ratio and is expected to grow revenue by 71.7% in 2022.
As a result, if FUBO can improve profit margins as it scales and generate substantial profitability, shareholders should see enormous returns.
Wall Street’s Take
Turning to Wall Street, fuboTV has a Moderate Buy consensus rating, based on six Buys and three Holds assigned in the past three months. The average fuboTV price target of $41.29 implies 160.2% upside potential.
Summary and Conclusion
FUBO has massive upside potential given its low enterprise value to revenue ratio and enormous discount to the consensus price target. Given its strong position in the television streaming space and strong support from Wall Street analysts, it could be an interesting time to consider the stock.
On the other hand, investors should keep in mind that the company is far from profitable and faces stiff competition from deep-pocketed competitors in the streaming space. As a result, it is a speculative investment.
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Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.
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