It appears the market really couldn’t make up its mind initially about fuboTV’s (FUBO) latest quarterly results. Shares swung from as low as negative 18% in Thursday’s pre-market to see out the session 10% into the green.
Perhaps investors thought it was time to give this suffering name some slack; Even after Thursday’s gains, the stock is still down 46% year-to-date.
All the hallmarks of a FUBO earnings report were on display in 4Q21 again, as a familiar pattern has emerged by now: outsized growth tempered by continued losses.
Both subs and revenue came in above the pre-announced numbers, although adj. EBITDA losses were ~4% higher than anticipated. Possibly the initial self-off was also due to the company expecting the growth to slow down somewhat this year.
FUBO guided for topline growth of 70% year-over-year and sub growth of 30%. However, these numbers are “very impressive,” says Roth analyst Darren Aftahi, who also highlights FUBO’s “history of conservatism” regarding subscribers, which could indicate a “more bullish case” for FY22 subs as the year progresses.
That said, ad ARPU dropped by 4% year-over-year in Q4, which Aftahi believes could be down to “lower engagement on newer cohorts,” and indicates the advertising element may not be “scaling” as fast as Aftahi had anticipated, and keeps cash burn “elevated” for now. This is important, as to the 5-star analyst, ad ARPU “remains the key to this model in terms of improving operating losses.”
“We believe if ad ARPU can steadily improve, FUBO could begin to see improved operating leverage to go alongside its ~70%+ projected FY22 topline growth,” Aftahi said. “We believe that the dynamic of lower cash burn and sustained growth would help facilitate a better multiple for shares.”
All in all, the analyst sticks to a Buy rating, although reflecting the “sentiment of the market on higher cash burn names,” the price target drops from $28 to $15. Still, there’s upside of 79% from current levels. (To watch Aftahi’s track record, click here)
The Street’s average target is just a touch above Aftahi’s objective; at $15.5, the figure suggests shares will push 85% higher over the coming months. Based on 5 Buys vs. 3 Holds, the analyst consensus rates this stock a Moderate Buy. (See fuboTV stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
