The market conditions appear to be turning a corner, and FUBO finally beat its EPS estimate in Q2 2022, losing less than expected this past quarter. The fundamentals of the business model are questionable, and many doubt that it could ever turn a profit, but with peak season of North American sports approaching as well as the 2022 World Cup, it appears that FUBO has finally turned a corner after bottoming at $2.32 on July 5th.
Closing this week at $3.47 is a far cry from its highs of $62 in late December 2020. Yet FUBO increased its paid North American subscriber base last quarter by 41% to 947K, and expects 1.35 million paid subscribers by the end of the year. FUBO also expects year-end revenue to be between $910 – $930 million. In addition, FUBO has decided to axe its costly sportsbook ambitions.
Its $3.47 close sits comfortably above the shorter term daily moving averages, which are below $2.85. A short period of consolidation could follow after this rapid upward move since July 26th, but if FUBO gets a weekly close above $3.75 – $4.00 it could be off to the races. Its 1W 100D MA currently sits at $19.33, which is converging on its first Fib retracement level of 0.236 (measured from All Time High to All Time Low). That retracement level sits at $16.41. I could see FUBO approaching that $16 resistance by the end of the year if 3 things happen:
1. North American sports and World Cup hype drive FuboTV subscriber growth in Q3, and their product provides users with high quality content and a smooth experience. Early reviews from Canadian viewers watching the English Premier League on FuboTV aren’t great, so hopefully the streaming quality improves. They currently have nearly $400 million cash on hand. There is no reason they can’t engineer a better product.
2. The Q3 report in November/December needs to be impressive. Their losses need to continue to decrease. In Q3 2021 their reported EPS was -0.59, and in Q1 2022 their EPS ballooned to a dreadful -0.89. Per their latest report they now have that number down to -0.63, but they’re still losing money YoY.
EPS for Q3 2022 needs to be under -0.59. If it’s significantly under that number–let’s say -0.50, and their reported revenue improves from from $221 million closer to $250 million, it could be off to the races.
3. This is an obvious one but it has to be said. Macro conditions must continue to improve: no additional major global conflicts, Monkeypox and Covid stay relatively under control, minimal American midterm election chaos, and decreases while the Fed eases up on aggressive interest rate hikes. Investors need reasons to be hopeful.
Let’s see what the rest of 2022 has in store for FUBO , one of the most heavily shorted stocks on the NYSE (30.02%) as of 7/15.
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