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FuboTV: Advertising Revenue Growth Is The Key To Profitability

Dec. 01, 2021 2:40 PM ETfuboTV Inc. (FUBO) Stock22 Comments
Mr. Long Game profile picture
Mr. Long Game
255 Followers

Summary

  • Q3 2021 earnings showed a strong 147% year-over-year growth in Advertising Revenue to $18.6M. Advertising Revenue Per User grew by 10% compared to the same quarter in 2020.
  • Sales & Marketing (S&M) costs fell from 36.4% to 32.2% in the same quarter from the prior year, increasing advertising margins.
  • fuboTV is working to keep S&M costs at 1-1.5x first month's revenue per user (RPU).
  • CPM rate is at 2.3 and growing to an industry standard of >3.0, representing 50% upside in ad revenue growth regardless of subscriber growth.
  • I have a price target of $45 for year-end 2022 based on my forecast for revenue growth per user.

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This article was written by

Mr. Long Game profile picture
255 Followers
I am a full-time investor with a focus on long positions, dividend growth, and options income strategies.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of FUBO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (22)

CR144 Research profile picture
You forget net loss is growing much faster than revenue .. So bigger revenue means even much bigger net loss.
Right now the trend is going in the wrong direction.
vekk profile picture
@CR144 Research— guidance is very strong — 32% revenue growth sequentially— which means advertising revenue from last quarters massive subscription additions hasn’t even been realized. This is a massive opportunity trading at 4x sales. Global expansion, international sports, and massive technology and team expansion with the Molotov acquisition.

Sportsbook doesn’t even matter yet. This is an amazing risk - reward opportunity at this price.

It will break $30 before earning.
Mr. Long Game profile picture
@CR144 Research This is from their press release today (1/10/22) regarding preliminary 4th quarter numbers. They only burned $25M in cash or ~($0.16)/share. This would be counter to the point you are making. Another strong step in the right direction, but not out of the woods yet.

Fourth quarter 2021 total revenue is expected to be between $215-$220 million, an increase of 105%-109% year-over-year. Prior guidance was $205-210 million for the quarter.

Fourth quarter 2021 advertising revenue is expected to be over $25 million, an increase in excess of 90% year-over-year, and crossing an annual run rate of $100 million.

Subscriber Acquisition Cost (SAC) is expected to be at the low end of the company’s target range of 1.0-1.5x monthly Average Revenue Per User (ARPU) for the quarter.

fuboTV expects to end the quarter with more than $375 million of cash, cash equivalents and restricted cash.
J
Buy under 10.
Crayfishkaliari profile picture
sports are struggling because of woketards but its a very long way from destroying the industry in favor of esports and youtubing your hobbies, meanwhile everyone is ending up in the streaming group, fubo is a no brainer and if it keeps going lower get ready to mint money
M
Getting near my $15/share target. Sigh... will see if I pull the trigger then. Companies losing money are getting punished with the spectre of rising interest rates (easy money disappearing), and since Fubo will still need to tap markets for additional capital, this could be a negative that continues to erode the stock to the $10/share range. We'll see. Definitely tempted, though, given subscriber growth.
J
@MarketMaker58

Market Summary
>
Fubotv Inc
NYSE: FUBO
16.78 USD −1.42 (7.83%)today
Dec 3, 10:39 AM EST • Disclaimer
Shamanski profile picture
They just need to get the EPS to -$0.15 range and they'll make a nice run.
Hopefully advertising and gambling will do that.
ROKU had a very high valuation at one point, 40x revs with low margins. They can have a much higher valuation if they can lower their losses.

-$.6 is too much.
Main Street Origin Investments profile picture
Counting on Rev growth while it’s out of favor in short term new environment. EPS and value are in favor while we go through nothings in favor at the moment. So if going to buy pull forward stocks. My other Ex. Is $NET while we all have these in portfolios. The time to pick up shares is when the pain gets excruciating. The shorts are pouncing. And bottom calling is now the futile objective vs a month ago it was there is no top. You wait to get a $FUBO when it cuts in half or more, while it’s happening, weak hands are out or heading for door. The long term contrarian knows to back off when fully priced bide time for these situations, accumulates, endures, and the soap opera eventually changed back to the worlds not really ending after all. Simplistic on well written article. But generally way I’ve played for going on 14 years now. Tends to be better than momentum failure.
Happy investing my SA cohorts 🤗
Mr. Long Game profile picture
@Main Street Origin Investments Largely agree assuming I have followed your comments correctly. There is no way to know where the bottom for fubo is in this current environment, but opportunity is there for a disciplined investor to establish a nice position over say the next 3-6 months.
k
@Mr. Long Game i feel like FUBO is generally better than a lot of the overpriced company at the moment, like PLTR, TWTR, PINS, SNOW. I bought too early, but i wont sell, going to buy again when it hits the IPO price
Crayfishkaliari profile picture
@karondongotbanned why not buy half half way there?
vekk profile picture
Good write-up. Very balanced.

A good interview to support your article—

podfollow.com/...
nerd_rage profile picture
There's going to be a way sports transitions to streaming but has to overcome the hurdles of greedy, overly expensive sports franchises and how to expand globally when sports has a strong regional draw.

For the former, maybe gambling provides the added revenue to overcome franchise greed. But I've also seen sports franchises' interest in launching their own streaming platforms.

If MLB, NFL etc had serious streaming efforts rather than the crippled attempts that now exist, how could any other service compete with that?
Mr. Long Game profile picture
@nerd_rage This is a really interesting point, but I think it ultimately comes down to the cost of maintaining such a platform and what does content/revenues look like in the offseason? NFL Sunday Ticket is essentially this already, but DirecTV has been able to pay substantially for the rights because it adds to their overall subscriber base. With the contract up for renewal in 2022 the NFL is looking to sell the streaming rights to Amazon, Disney (ESPN+/Hulu), or Apple. Amazon is rumored to be the leader in the clubhouse and would be a better outcome for fuboTV then it going to Disney.
A
@nerd_rage great point. I think it’s mute for the next few years at least. No rapid change to the NFL model due to NFL revenue expansion and owners risk aversion IMO.
E
Very good article, you clearly mentioned the risk of a new capital delusion, it will come I am afraid
jakefountain profile picture
Congrats on your first article.

Fubo has great top line growth but are spending a lot to get that. Need to get that figured out.
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