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Losses and a Questionable Business Model Make fuboTV Stock a Sell

At a time when investors are looking for profitable companies — or at least firms that are clearly moving toward profitability — fuboTV’s (NYSE:FUBO) earnings before interest, taxes, depreciation, and amortization (EBITDA) losses are ballooning. Meanwhile, the company’s subscriber count is quickly increasing. But its subscriber growth appears to be slowing and its total user base is still not very impressive overall. Given these points, I remain bearish on FUBO stock and continue to urge investors to sell the shares.

Surging EBITDA Losses

In the fourth quarter (Q4) of 2021, fuboTV’s EBITDA loss, excluding certain items, came in at $82.6 million. During the same quarter a year earlier, its adjusted EBITDA loss was $43.6 million.

Similarly, for all of 2021, the streaming company reported an EBITDA loss of $317.4 million, much worse than the $202 million EBITDA loss that it generated in 2020.

Rapid Subscriber Growth, but Lackluster  Totals

Excluding an acquisition, fuboTV’s subscriber base jumped 106% year-over-year to 1.13 million. But the number of subscribers increased 20% in Q4, way down from the 36% quarter-over-quarter growth that the company reported in Q3.

Moreover, 1.13 million subscribers, or 1.3 million including the company’s acquisition of Molotov, are not that impressive for a company that was founded in 2015 and should be able to take advantage of the huge exodus to streaming.

As a reference point, Snap’s (NYSE:SNAP) Snapchat, which was founded slightly over three years before fuboTV, reported in January 2022 that it had 319 million daily active users. And just three years after Roku’s (NASDAQ:ROKU) Roku Channel was launched, its viewership had reached 63 million.

I realize that Roku and Snap have very different business models than fuboTV. But as I’ve contended for many months, I believe that one of fuboTV’s main problems, if not its biggest obstacle, is that its business model is quite flawed. That’s because, as I’ve explained previously, most cord cutters want to save money by ditching cable. Unfortunately, fuboTV does not cost significantly less than cable.

I do expect the market to continue to rebound in the days and weeks ahead. As a result, FUBO stock could get a small lift over the next month or so. But I remain bearish on the company’s longer-term outlook. I don’t think that it’s the type of name that’s likely to outperform the market in the short- or medium-term.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.