FuboTV is an ‘Inexpensive’ Way to Bet on Sports and Streaming
If you feel like you’ve missed the boat on streaming stocks such as Netflix and Roku, FuboTV could be an opportunity for redemption. The sports-first streaming platform is in a position to exploit cord-cutting trends with its vast offering of sporting events and lower prices, and Wall Street analysts are quickly rallying behind the stock.
What is FuboTV? It’s a Virtual Multichannel Video Programming Distributor (vMVPD) a.k.a a skinny bundle. That means it aggregates live and on-demand tv channels and delivers it to subscribers over the internet. FuboTV offers more than 50,000 live sporting events each year, and gives access to more than 100 channels, including 43 of the top 50 Nielsen-ranked networks across sports, news, and entertainment.
Wall Street’s warm welcome: After making its debut on the New York Stock Exchange on October 8, analysts are beginning to voice their bullish support for FuboTV shares. Analysts from Needham, Oppenheimer, BMO, Roth Capital, and Evercore ISI all initiated coverage with bullish ratings on Monday.
Cheap valuation vs. peers: Laura Martin, analyst at Needham, started coverage with a BUY rating and $17 price target, saying FUBO is “an inexpensive way for public investors to participate in the US consumer shift toward OTT and Streaming TV" and comparing its valuation to peers including Netflix, Roku, Altice, and Charter.
Sports betting: A major catalyst for sports viewership growth and engagement is legalization of online sports betting. Oppenheimer analyst Jason Helfstein initiated coverage of FuboTV with an OUTPERFORM rating and $17 price target. He noted that “the growth of the online sports betting (OSB) market could present future partnerships/revenue opportunities.” Martin also emphasized the gambling opportunity, saying “Sports-betting could add $10/subscriber of revenue over the next 3-5 years, at a 50% gross margin.” Meanwhile, Stifel analyst Wieczynski recently said he expects legalization to ramp up because states are desperate for tax dollars.
“Given the ongoing pandemic and the fact many states are hurting for tax dollars, we believe there could be up to 10 states that could fast track or formally pass sports betting/iGaming legislation come this November.”
Big picture: Cord-cutting is accelerating as consumers ditch traditional cable TV for more affordable streaming services. Helfstein estimates each cord-cutter saves about $90 a month, and predicts 36% of U.S. households will have made the switch by 2025. Live sports, however, has been the glue keeping many Pay-TV subscribers from cutting the cord as many other streaming networks stay focused on non-sports related content. With a focus on sports, FuboTV could be the preferred destination for sports fans clinging onto cable.
