After a string of holiday-season bearish analyst reports that lopped more than half the value off its shares, sports-centric streaming TV provider FuboTV went on the offensive today, releasing preliminary fourth-quarter results that show strong sales and subscriber growth.
Fubo’s fourth-quarter revenue landed between $94 million and $98 million in a preliminary tally, up from prior management guidance of $80 million to $85 million for the quarter. The company also had more than 545,000 paid subscribers at year-end—exceeding prior management guidance of as many as 510,000 and representing a 72% increase over the end of 2019, Fubo said in its press release.
“In 2021, we will continue to be laser focused on executing our growth strategies, which include continuing to grow advertising revenues, working to implement sports wagering into our product and further establishing FuboTV as a leader in sports and live streaming,” CEO David Gandler said in the release.
Fubo’s news was timed with the opening of trading in New York, sparking shares to a 20% gain in early action, vaulting above $29. While it’s not unusual for a company to release early preliminary results, especially when they are good, the move this morning was clearly designed to go on a counteroffensive against the bears. Fubo will release its official fourth-quarter results later this quarter.
The company’s business strategy is to promote its live sports programming to bring in subscribers. It offers a dozen professional sports leagues, collegiate sports and horse races as part of its packages, which begin at $60 a month in the U.S. Fubo went public in April in a reverse merger, a transaction where a private company buys a public company solely for its stock market listing. After moving its listing to the New York Stock Exchange in October, shares enjoyed a sharp rally, racing from $10 a share at the end of September to a high of $62 on Dec. 22.
After hitting that peak, a series of bearish Wall Street reports came out. First, investment bank BMO cut its rating on the company from “buy” to “market perform” and set a price target of $33 on Dec. 23. On Christmas Eve, media research firm LightShed Partners issued a “Sell” rating on the company, writing in its report, “Management spin and buzzwords cannot change the flawed underlying multichannel video business model. In reality, Fubo was a failed venture backed company that had no access to capital in January 2020 and has turned itself into a $7 billion market company (158 million fully diluted shares) through investment bank analyst cheerleading magic and the recent euphoria created by unsophisticated retail investors.”
Then, on Dec. 30, short-seller Kerrisdale Capital said Fubo’s stock price was “completely unmoored from reality” in valuing the company at $15,000 per subscriber. Taken altogether, the bearish reports hacked Fubo to $28 at year’s end, a 55% loss in just six trading days.
Starting this quarter, FuboTV is a component of Sportico’s JohnWallStreet Sports Stock Index, a benchmark index meant to reflect the state of the sports business.