Streaming video is a vital part of the entertainment landscape, and FuboTV (NYSE:FUBO) is proving one of the fastest-growing names in the space. Its latest earnings report is a fantastic record of growth, but with losses mounting, it's likely starting to wear on investors. The improvements are certainly good news, but will these be enough to keep investors in the fold?
Record-Breaking Numbers All Over
This quarter for FuboTV represented one big win: the first time the company has cleared $100 million in quarterly revenue. It brought in revenue of $105.1 million with this most recent quarter, and subscriber numbers are also on the rise, reaching 547,880. That's actually up a whopping 73% over the same time in 2019, reports note, which is a win no matter how you slice it. According to CEO and co-founder David Gandler, that's actually part of the company's strongest fiscal year yet.
However, there's a problem connected to those fantastic numbers; the company posted a net loss for the year of $570.5 million. This includes a charge for “impairment of intangible assets and goodwill” of $248.9 million. Given that 2019's net loss was $35 million, it's easy to see a potential problem developing for the company.
Moreover, those exciting subscriber numbers are actually poised to see a bit of reversal, reports note; the company expects to see subscriber levels dip to between 520,000 and 530,000 by the end of this month. However, it also looks for that dip to be largely temporary, as the company expects, on a full-year basis, subscribers to reach between 760,000 and 770,000 subscribers by the end of 2021. It also expects revenue between $460 million and $470 million by the end of the year as well. Given the revenue numbers from the preceding quarter, this isn't out of line given the improvement in subscribers the company is expecting.
Analysts Remain Optimistic
Analyst sentiment, as measured by our latest research, doesn't go a long way back; analysts only started chiming in about three months ago. Three months ago, the company had six “buy” ratings outright. A month ago, that increased to seven “buy” ratings, but also added a “hold”. That's where we are today, with one “hold” and seven “buy” ratings in place.
The price target has increased rapidly in that interim, going from $24.58 three months ago to $43.13 a month ago before settling in at $45 even today. Given that FuboTV shares are currently selling at $35.75 as of this writing, there's some upside potential still in play here. While there hasn't been much activity in general, the activity that's emerged has been almost overwhelmingly positive.
An Exciting Future Ahead?
We've seen FuboTV make a lot of gains in recent months—it's advanced huge losses but it's also posted some record-breaking numbers—and a lot of that likely has to do with streaming video in general. That rising tide has lifted a lot of boats as potential customers have been kept inside due to a combination of factors ranging from fear to government-induced restriction. FuboTV, meanwhile, had one key advantage that, in this environment, actually worked a bit against it: a focus on sports.
FuboTV's biggest advantage is that it not only works like a streaming cable package—including a range of cable standards like A&E, FX, and MTV—but it also has a heavy sports presence, including NFL Redzone, NHL Networks, MLB Strikezone and a range of others. The problem with that was that 2020 was an absolutely terrible year for sports. Most of the biggest names barely got off the ground, if they even started at all this year, and frequent “pauses” due to shifting coronavirus levels left the season feeling almost woefully uneven.
That's likely to change this year; as sports start back up again—the Miami Dolphins back in late October got the go-ahead from Governor Ron DeSantis to sell out Hard Rock Stadium, putting 65,000 sports fans in one place—FuboTV's full value will be felt by subscribers. Some will leave, certainly—that accounts for the expected loss in the first quarter—but with a fuller return of sports in general, FuboTV will likely be able to improve. The amount of that improvement is debatable, though; remember that FuboTV is up somewhere around three-fold from what it was back in November 2020.
This is good news for investors; FuboTV can't keep operating at those aforementioned loss levels forever, and with a range of competitors from Hulu to Netflix (NASDAQ:NFLX) already operating, FuboTV will need every advantage it can get to stay in the fray. A super-powered sports package could be exactly what FuboTV needs, and with sports actually returning to drive such a package, FuboTV may be exactly the niche player a lot of cable-cutters are looking for.
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