Fubo TV Shares Rise On Better-Than-Expected Q1 Results, Subscriber Growth

Fubo TV stock popped more than 23% in after-hours trading after the streaming bundle purveyor reported better-than-expected revenue and subscriber gains in the first quarter.

Net losses of 59 cents a share in the period undershot Wall Street forecasts by 13 cents. The company said the figure included two cents of negative impact from expenses from a plan to launch a sports betting business, plus another two cents related to debt discount amortization.

Despite the murkiness on the bottom line, the subscriber story buoyed investor hopes. Fubo added 43,000 subscribers in the quarter, reversing the year-earlier quarter’s decline of 28,000. Its year-over-year increase of 303,000 subscribers was a jump of 105%, which Fubo said compares with growth of 24% for the entire virtual MVPD market during the same period.

Fubo stock has been the subject of fierce debate among analysts and retail investors, with the latter helping to cause a runup in shares late last year. The company has seen its shares fall more than 60% from that peak, though recent trading days in the high-teens to around $20 have put it well above the $10 level of its IPO in October 2020.

Ad revenue reached $12.6 million, up 206% year-over-year, making up 11% of total company revenue in the quarter, up from 8% in the first quarter of 2020.

“This quarter represents an inflection point for our business as we acquired less seasonally driven subscribers and more permanent cord-cutters, enticed by our differentiated content lineup and product experience,” CEO David Gandler and executive chairman Edgar Bronfman Jr. wrote in their quarterly letter to shareholders.

The company boosted its guidance for full-year 2021 revenue to $520 million to 530 million and subscriber levels by year-end to 830,000 to 850,000. The midpoint of the subscriber range would be a 53% increase, up from the 40% rise in previous guidance.

Based on the subscriber projection, full-year net additions will be at least 282,000, which is 22% above net additions in 2020.

Bears on Fubo point to the stiff competition in sports wagering and also to questions around the pay-TV bundle, whether or not the package is delivered via streaming. Similar services like DirecTV Now (known today as AT&T TV Now), PlayStation Vue and Sling TV have variously stagnated, declined or gone under. Hulu and YouTube have spent heavily to take the lead in the virtual bundle race.

Fubo points to its proprietary viewership data and product differentiation as key advantages. Its shareholder letter also noted the statement made by the NFL, which reaffirmed the importance of the bundle in its decade-long rights renewals in March. Fubo also noted it has exclusive rights to the South AmericanvQatar World Cup 2022 Qualifiers, or CONMEBOL. “Over time, Fubo plans to continue to make data-based economic decisions as it pertains to the future acquisition of certain exclusive sports streaming rights,” the letter said.

It also said the quarterly subscriber gains buck the expectation of skeptics about Fubo being vulnerable because of not carrying any Turner networks, a result of a parting of the ways in 2019. Even as NCAA March Madness games aired across TBS, TNT and other networks, leaving Fubo with only partial coverage of the tournament (which is shared with ViacomCBS), subscriber momentum continued.

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