Bears Pile On FuboTV After 330% Rise In 2020

One of the hottest stocks in the streaming market has been fuboTV FUBO, a company that was uplisted to the NYSE earlier this year. After a strong run that included five days of 10%-plus gains in a row, bears are pouring into the name, questioning its valuation and the long-term outlook.

Hedgeye: A bullish scenario for fuboTV is 1.5 million subscribers and $100 ARPU for the company. This, along with 15% adjusted EBITDA, only gives the company a valuation of $23 per share, according to Hedgeye’s Andrew Freedman.

A 13G filing disclosing a 7.44% stake from Islet Management caused shares to spike in after-hours trading earlier this week. Freedman said he has never seen so many folks get excited about a 13G filing before.

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Lightshed Partners: Rich Greenfield of Lightshed Partners called fuboTV the most attractive short he has ever seen.

“Unfortunately for $FUBO, the business they are in is simply not a good business. Fubo investors should be running for the exit with the stock dramatically overvalued at current levels,” Greenfield said.

FuboTV being a play on sports betting isn’t seen as a catalyst by Greenfield. FuboTV has no casino partner, its customers are likely betting on other platforms and putting sports betting platforms on television faces regulatory issues, he said. 

The streaming company should not be compared to Netflix Inc NFLX, DraftKings Inc DKNG or Penn National Gaming PENN, Greenfield said. 

“Fubo is simply another virtual multichannel video programming distributor.”

A share lockup that occurred Wednesday could lead to additional downside, with equity owners like The Walt Disney Company DIS, Comcast Corporation CMCSA, Discovery Inc DISCA and AMC Networks Inc AMCX all able to sell their shares.

With $240 million in cash, Greenfield doesn’t believe fuboTV will be able to acquire any meaningful sports rights without additional fundraising.

Lightspeed has a Sell rating and $8 price target on fuboTV.

The Bull Case: BMO Capital analyst Daniel Salmon stepped to the sidelines with a $33 price target and a downgrade to Market Perform.

The analyst did hit on some positives that offset the bear cases laid out above. FuboTV’s acquisition of Balto Sports could help It launch a free-to-play gaming feature in 2021, which could be presented to investors in the coming months, the analyst said. 

The company has a “more promising path” toward profit due to improved attachment rates, he said. 

Needham analyst Laura Martin has a Buy rating and recently raised the price target from $30 to $60. 

Martin gave six reasons why fuboTV could be a good stock pick in 2021. The six reasons are market share gains, a partnership with Hisense, acquisition of Balto Sports, the large short position, discount to OTT peers and the company’s advertising business.

Price Action: Shares of fuboTV were down 6.33% to $31.20 premarket Thursday.