FuboTV Stock Down 28% in November – Time to Buy FUBO Stock?

The price of FuboTV stock is down 28% so far in November following the release of the firm’s earnings report covering the third quarter of its 2021 fiscal year upon announcing the acquisition of a French live TV streaming company.

During the six months ended on 30 September, the firm reported revenues of $156.7 million compared to $61.2 million it brought during the same period a year ago. This figure beat Wall Street’s estimate of $143.3 million for the period.

The company reported a 108% year-on-year jump in its subscriber base, currently serving a total of 944,605 customers, while the management now expects to exceed the 1 billion figure by the end of the year.

Meanwhile, FuboTV reported a thinner negative adjusted EBITDA margin of 51.9% during the third quarter of 2021 compared to the negative 77.6% and 120.9% figures reported in Q3 2020 and Q3 2019 respectively.

Finally, FuboTV upped its revenue guidance for the full 2021 fiscal year to a range of $612 to $617 million compared to a previous forecast ranging from $560 to $570 million. For the entire year, analysts had estimated total revenues of $567.7 million for the sports streaming platform.

Even though the company reported better-than-expected results, the dilutive nature of the announced acquisition of Molotov, a French live TV streaming firm, seems to have had an impact on FuboTV’s post-earnings valuation.

In this regard, the firm stated that it would pay at least 85% of the $190 million deal in equity, resulting in a total of approximately 4.9 million shares that will have to be issued to settle the transaction. This figure represented 3.4% of the company’s weighted average shares outstanding as reported in Q3 2021.

Can this post-earnings decline result in the beginning of a downtrend for FuboTV stock? In this article, I’ll attempt to answer that question upon assessing the latest price action and fundamentals of this streaming stock.

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FuboTV Stock – Technical Analysis

The technical situation for FuboTV stock is worrying as the price has gone down in 8 out of the 9 past stock trading sessions as the negative post-earnings momentum seems to have taken over the price action.

At the moment, the price is standing 22% below its 200-day moving average and well below its short-term moving averages while trading volumes were quite high on the day that the earnings report came out. Back then, more than 33 million shares exchanged hands – a figure that exceeded the 10-day average by more than 4 times.

Last Friday, the price tagged the lower bound of the descending price channel highlighted in the chart and this makes the next few days quite relevant for the stock as a break below this threshold could lead to a sizable decline in the firm’s valuation.

Momentum indicators are quite bearish at the moment as the Relative Strength Index (RSI) has entered oversold territory while the MACD has drifted below the signal line. This move has been accompanied by steadily increasing negative histogram readings.

Overall, a technical rebound could occur at this level as the negative momentum seems to have gone too far already. That said, FuboTV remains a heavily shorted issue with a total short interest of 15.6% as per data from Finviz.

Interestingly, short interest has declined since I last wrote about FUBO in August. Back then, the percentage stood at 18%. This decline could indicate that short sellers may be already cashing in on their bets and that could result in a short-term bump if more of them start to cover their short positions in the future.

FuboTV Stock – Fundamental Analysis

FuboTV has had a positive track record of beat-and-raise so far this year as the company continues to perform better than Wall Street expects. That said, the market has not been kind to FUBO lately as indicated by the sustained decline the price has been experiencing.

One reason for this is that the stock’s former “meme” status may be discouraging investors from taking a closer look at the company and its outstanding latest performance.

At its current market capitalization of $3 billion, the firm is being valued at only 5 times its forecasted revenues for 2021 while FuboTV may soon produce $1 billion in annual revenues. Also, some underappreciated revenue streams could push FuboTV’s revenues higher in the future including its advertising and sports betting segments.

Even though the Molotov acquisition is dilutive, its impact on existing shareholders is quite small and it does not justify the latest sell-off.

Overall, the market seems to be being overly pessimistic about a company whose past performance and growth prospects are quite promising and that could provide an excellent opportunity for long-term holders to grab some shares of an outstanding business in a rapidly growing sector (streaming) at a decent price.

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