FuboTV (NYSE:FUBO) is a sports-oriented live streaming company, granting subscribers access to a myriad of live sporting events, relevant news channels, and a rich entertainment catalog.
Nowadays, most households are subscribed to more than one streaming service. However, be it in Netflix (NASDAQ:NFLX), Amazon's (NASDAQ:AMZN) Prime Video, Disney+ (DIS), AT&T's (NYSE:T) HBO, or any other of the well-known services, subscribers are offered little to no access to sports content.
This is especially the case with live events, which none of the above services provide. FuboTV's proprietary video viewing platform, which works harmoniously with all major sports leagues and content-owner delivery requirements, caters specifically to this underserved and fragmented market. I am bullish on the stock. (See FUBO stock charts on TipRanks)
Rapidly Growing Financials
FuboTV's involvement in the sports streaming industry has been quite successful, with every meaningful metric from current subscribers, ARPU (average revenue per user), and total revenues surging consistently.
Revenues grew 196% year-over-year to $130.9 million, with subscribers growing 138% year-over-year, and 15% sequentially, to 681,721. Besides growing its subscriber base, the company was able to extract significantly more dollars out of each subscriber, with ARPU growing 30% year-over-year, to $71.43 per month.
FuboTV's ARPU is several times higher than the aforementioned streaming services, powered by the company's aggressive investments in its content catalog, bundling, and upselling tactics. The way the company's trajectory is evolving, it is more than likely that ARPU will continue rising higher going forward.
Specifically, advertising ARPU should be driven higher by: A growing content catalog (more add-ons to sell), A rising advertising ARPU (it grew 281% year-over-year to $16.5 million), and Fubo's snowballing betting initiatives (the company recently received approval to offer online sports wagering from the Iowa Racing and Gaming Commission, while The New York Jets just announced a multi-year agreement with Fubo's Sportsbook, anticipated to launch in Q4-2021).
These, amongst other catalysts, should provide a tremendous boost to revenues over time, with an element of speculation partially, nonetheless.
Most steaming services do not utilize ads to enhance users' experience. However, this does not apply to sports. It's quite normal for any live service to project ads in between game breaks. This creates a fantastic opportunity for FuboTV to grow its advertising revenues.
Advertisers frequently assign their ad budgets to Over-the-Top (OTT) services to reach their target audiences. Simultaneously, FuboTV is able to provide them an expanding and gradually more valuable live audience, to which advertisers can deploy their un-skippable ad inventory on high-quality content.
Advertisers can also benefit from mixing their traditional TV advertising formats with the perks of digital advertising. Such perks comprise measurability, relevancy, and interactivity. Therefore, advertising ARPU should keep thriving in the medium-term, on top of the service's own subscriber growth.
Wall Street’s Take
Turning to Wall Street, FuboTV has a Strong Buy consensus rating, based on six Buys, one Hold, and zero Sells assigned in the past three months. At $43.86, the average FUBO price target implies a 50.7% upside potential.
Disclosure: On the date of publication, Nikolaos Sismanis had a beneficial long position in the shares of FuboTV through stock ownership.
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