Shares of FuboTV (NYSE:FUBO) are down more than 17% in premarket trading Friday after the streaming television service provider trimmed its NA revenue outlook for the full year.
FUBO reported a Q1 adjusted EBITDA loss of $105.5 million, up from a $46.5 million loss in the year-ago period, while analysts were expecting a $68.2 million loss. Revenue came in at $242 million in the period, compared to $119.7 million in the year-ago period, and in line with the expected $243 million.
For Q2, FUBO expects NA revenue in the range of $220 million to $225 million, and the Rest of World revenue in the range of $5 million to $6 million. The company estimates Q2 number of NA subscribers in the range of 965,000 to 975,000, and 300,000 to 310,000 for the Rest of World.
For the full year, FuboTV expects NA revenue in the range of $1.02 billion to $1.03 billion, down from its previous guidance of $1.08 billion to $1.09 billion. The Rest of World revenue for the full year is expected between $20 million and $25 million, up from its previous forecast range of $15 million to $20 million.
The number of NA subscribers for the full fiscal year is anticipated in the range of 1.47 million to 1.49 million, down from the previous guidance of 1.50 million to 1.51 million. The number of subscribers for the Rest of World is expected in the range of 300,000 to 310,000, up from the previous outlook of 270,000 to 280,000.
"In a less robust advertising market, however, we experienced some pressure on adjusted contribution margin due to slower ad sales growth than we had initially expected, with ad revenue up 81% year-over-year,” the company said in a statement.
JPMorgan analyst Philip Cusick downgraded to Underweight from Neutral as “long-term business model questions remain in focus.”
“Our downgrade is driven by questions about: 1) the company’s long-term business model and path to profitability; 2) the viability of FUBO’s burgeoning sportsbook given heightened competition in the space; and 3) medium-term liquidity and solvency as the company burns cash and the ATM share sale avenue is closed by the falloff in the stock. Despite the sizable sell-off year-to-date, we remain skeptical of FUBO’s path to cash flow in an increasingly challenging streaming environment given the company’s limited operating leverage vis-à-vis this peer group,” Cusick said in a client note.
Roth Capital analyst Darren Aftahi downgraded to Neutral from Buy with a new price target of $4.25 per share (down from $7.50). The key pillar of the downgraded thesis is that the cost of the subscriber base is yet to be offset by better advertising.
“We are moving to the sidelines, downgrading shares to Neutral from Buy as we wait to see a tangible path to profitability with an ad business performing below expectations and a consistent need to spend for sub acquisition and to maintain that base. While its $456M in cash ($204M raised via ATM in 1Q at ~$7.52) is expected to get FUBO to year-end 2023, it still requires additional financing in FY24 (potentially sooner if subscriber costs aren’t offset by a faster ramp in ad ARPU),” Aftahi wrote in a client note.
By Senad Karaahmetovic