Insights

Why fuboTV Stock Soared Today

What happened

Shares of live-sports streaming platform fuboTV (NYSE: FUBO) soared on Friday after it reported financial results for the second quarter of 2022 and said it was considering strategic options. fuboTV stock finished the session up an impressive 17%.

So what

In Q2, fuboTV generated revenue of $222 million, up 70% year over year. Subscription average revenue per user (ARPU) was only up a modest 2% from the prior-year period. However, the company made up for modest ARPU growth with robust overall subscriber growth. By the end of the quarter, fuboTV had nearly 1.3 million subscribers worldwide, up 57% from the same quarter last year.

The problem is fuboTV’s streaming service by itself is still a negative gross-margin business, doomed to lose money. Management had hoped to remedy this by monetizing its large, growing subscriber base in more ways. And one of those potential revenue streams was sports betting. However, the company said it’s exploring “strategic opportunities” to partner with another business in this area.

Now what

For 2022, fuboTV lowered its revenue guidance and lowered its overall subscriber guidance. But on a positive note, its guidance still represents full-year growth of 45% and 19%, respectively. Moreover, it doesn’t include any potential upside from sports betting. 

On a less positive note, fuboTV had an eye-popping $91.3 million operating loss in Q2 alone. And management said it doesn’t expect to be free-cash-flow positive until 2025.

Looking at ongoing losses for years, fuboTV filed a $750 million shelf offering this morning, wherein it can sell shares to raise money as needed. For perspective, fuboTV’s market capitalization is currently $642 million. Therefore, this is a humongous potential stock offering that shareholders need to be aware of, especially as losses continue to mount.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends fuboTV, Inc. The Motley Fool has a disclosure policy.

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