Global live TV streaming platform fuboTV Inc. (FUBO) operates in the United States, Canada, France, and Spain. In the third quarter, the company reported higher-than-expected EPS and revenue. Its revenue came 5.4% above the consensus estimate, while its loss per share came to $0.10 lower than expected.

FUBO’s North America Streaming subscribers rose 31% year-over-year to a record high of 1,231k in the third quarter. Its subscription ARPU rose 4% from the prior-year period to $64.15. On the other hand, its Advertising ARPU declined 12% year-over-year to $7.37. Its Total ARPU increased 2% year-over-year to $71.52.

The streaming platform’s revenue from Rest of World (ROW) came in at $5.80 million, and total paid subscribers stood at 358K at the end of the third quarter. FUBO’s executive chairman Edgar Bronfman Jr. said, “We’re very pleased with Fubo’s third quarter performance demonstrated by double-digit growth in North America across several of our KPIs: subscribers, total revenue, and ad revenue.”

“As consumers continue to become disillusioned with the many expensive and content-limited streaming services in the market, and those streaming services turn to other monetization levers like advertising, we are excited about our unique positioning in the marketplace. We believe our dual subscription and advertising model provides value for shareholders while our aggregation of premium sports, news, and entertainment content is an affordable option for consumers,” he added.

The company incurred a non-cash impairment charge of $35.50 million pertaining to intangible and other long-lived assets associated with the closure of Fubo Gaming and Fubo Sportsbook. In order to recoup its losses, FUBO raised additional capital by issuing 31% more shares as of September 30, 2022.

The company expects its fourth-quarter subscribers from North America Streaming between 1,355K to 1,375K, representing a 22% year-over-year growth at the midpoint. Its revenue is expected to come between $277.50 to $282.50 million, representing a 22% year-over-year growth at the midpoint.

It raised its full-year revenue guidance from $910 million to $930 million to $949.70 to $954.70 million, representing a 50% year-over-year growth at the midpoint.

Its revenue for the fourth quarter from Rest of World (ROW) is expected to come between $5 million to $6 million. Its full-year revenue is expected to come between $22.20 million to $23.20 million. It raised its full-year subscriber guidance from 355,000-365,000 to 340,000-360,000.

Here's what could influence FUBO’s performance in the upcoming months:

Weak Financials

FUBO’s total operating expenses increased 44.3% year-over-year to $375.14 million for the third quarter ended September 30, 2022. Its operating loss widened 45.6% year-over-year to $150.33 million. The company’s adjusted net loss widened 12.3% year-over-year to $94.84 million.

In addition, its adjusted EBITDA loss widened 14.1% year-over-year to $92.72 million. Also, its adjusted loss per share came in at $0.52.

Mixed Analyst Estimates

FUBO’s EPS for fiscal 2022 and 2023 is expected to remain negative. Its revenue for fiscal 2022 and 2023 is expected to increase 53.5% and 29.4% year-over-year to $980.05 million and $1.27 billion, respectively.

Weak Profitability

FUBO’s trailing-12-month gross profit margin is negative 5.18% compared to the 49.65% industry average. Likewise, its trailing-12-month net income margin is negative 56.69% compared to the 3.25% industry average. Also, its trailing-12-month EBITDA margin is negative 45.62% compared to the 19.46% industry average.

POWR Ratings Reflect Bleak Prospects

FUBO has an overall F rating, equating to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. FUBO has an F grade for Quality, in sync with its weak profitability.

It has an F grade for Stability, consistent with its 2.45 beta.

FUBO is ranked last out of 14 stocks in the D-rated Entertainment – Sports & Theme Parks industry. Click here to access FUBO’s ratings for Growth, Value, Momentum, and Sentiment.

Bottom Line

FUBO’s stock is trading below its 50-day and 200-day moving averages of $2.25 and $3.15, respectively, indicating a downtrend. Although FUBO has guided strong subscriber and revenue growth for the fourth quarter and fiscal 2022, it is still far from profitability. Also, the company is not expecting positive EBITDA until 2025.

Moreover, with the business not generating free cash flows, it is expected to struggle to refinance the nearly $400 million of convertible debt.

Given the company’s weak financials and profitability, it could be wise to avoid the stock now.

How Does fuboTV Inc. (FUBO) Stack up Against Its Peers?

FUBO has an overall POWR Rating of F, equating to a Strong Sell rating. Therefore, one might want to consider investing in other Entertainment – Sports & Theme Parks stocks with a B (Buy) rating, such as Cedar Fair, L.P. (FUN), Emerald Holding, Inc. (EEX), and Endeavor Group Holdings, Inc. (EDR).

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FUBO shares were trading at $2.07 per share on Monday afternoon, down $0.03 (-1.43%). Year-to-date, FUBO has gained 18.97%, versus a 7.70% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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