Title: Should You Consider Buying fuboTV Stock, Given its 50% Yearly Dip?
While the stock market has been thriving this year, one company that's been struggling is fuboTV (FUBO, -7.91%). The sports streaming service provider is battling intense competition and remains unprofitable, making investors wary of investing in it. The stock has dropped about 47% since the beginning of the year.
But with the company securing some promising deals recently and trading at a modest valuation, could this be an opportunity for investors to score a bargain purchase as fuboTV expands its operations?
Locking Down Promising Deals
The formula for success in the streaming world is partnerships: the more a company has, the more exclusive opportunities it can take advantage of, potentially attracting more customers.
In October, sports media company The Athletic announced that fuboTV would be its live TV streaming partner. The Athletic's content will be integrated into fuboTV's live game blogs and additional content, positioning the company as a top sports streaming destination. This may not directly incentivize users to subscribe to fuboTV, but it can help bring the platform in front of more people and increase sales growth.
Additionally, fuboTV unveiled new stand-alone premium subscription services. Customers can now sign up for packages such as FanDuel Sports Network or NBA League Pass without needing a base channel plan with fuboTV, providing more flexibility and cost savings for customers. The company is also exploring offering "skinny bundles," appealing to budget-conscious consumers.
Struggling Despite Impressive Growth
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FuboTV reported strong sales growth in its latest earnings report, with sales for the September 2024 period increasing by 20% year-over-year to $386 million. However, the company remains unprofitable, and there's hope that it's moving in the right direction.
Operating expenses for the period totaled $445 million, but rose only 10% compared to the same period in 2023. As a result, the operating loss for Q3 2024 was $59 million, an improvement from the $83 million loss in Q3 2023.
However, with competition intensifying in the streaming industry, it's unclear if fuboTV can sustain this trajectory. In August, the company managed to halt a potential joint venture between Walt Disney, Fox, and Warner Bros. Discovery that could have seriously threatened fuboTV's ability to compete. But this is just a temporary injunction; there's no guarantee that fuboTV will be able to ward off consolidation in the industry or prevent these companies from joining forces in the future.
Streaming services find it particularly challenging to turn a profit, especially with sports licensing deals being expensive. And consolidation might seem like the only viable option for struggling streaming companies.
Should You Buy fuboTV Stock Now?
fuboTV's expanding offerings and partnership with The Athletic are promising developments for the company that could drive revenue growth. However, it's tough to overlook its lack of profitability and the intense competition it faces.
Many consumers are dealing with financial constraints due to inflation and can't afford expensive streaming options. The streaming industry looks primed for consolidation, with a potential three-headed giant of Disney, Warner Bros., and Fox to contend with, potentially eroding fuboTV's chances of success. Even if the stock drops further, investors may be better off avoiding it until fuboTV shows signs of turning a profit.
Despite the company's impressive growth, with sales increasing by 20% year-over-year to $386 million, fuboTV continues to struggle financially and remains unprofitable. This has led some investors to be wary of investing in the company, preferring to allocate their money towards more financially stable options in the market. However, with the company securing promising deals, such as partnering with The Athletic and offering new stand-alone premium subscription services, there may be potential for investors to reconsider, especially if they are looking for opportunities to invest in companies with growth potential at a modest valuation.
