Streaming and gaming network platform fuboTV NYSE: FUBO stock has fallen nearly in half since it’s peak earlier in the year. The Company rolled out its fuboTV sports book in November, which will be a key growth driver enabling viewers to engage in real-time sports betting while viewing games on the streaming network. fuboTV should continue to benefit from cord cutting, streaming, and sports betting tailwinds as more states approve iGaming regulatory approval. The post-pandemic return to live events should continue to expand with the continued acceleration of COVID-19 vaccination booster shots. Prudent investors seeking exposure in a dual tailwinds play can watch for opportunistic pullback in shares of fuboTV.
Q3 Fiscal 2021 Earnings Release
On Nov. 9, 2021, fuboTV reported its fiscal Q3 2021 results for the quarter ending September 2021. The Company reported earnings-per-share (EPS) loss of (-$0.59) versus consensus analyst estimates for a loss of (-$0.55), a (-$0.04) miss. Revenues grew 156% year-over-year (YoY) to $156.70 million, beating analyst estimates for $143.34 million. Advertising revenues grew 147% to $18.6 million. Average revenue per user (ARPU) per month grew 10% to $74.54. Subscribers grew 108% YoY to 944,605 and 39% sequentially. fuboTV CEO David Gandler commented, “Fubo Sportsbook was successfully launched in Iowa on November 3. This is the first of a healthy pipeline of other states where we plan to launch in the ensuing months, which will allow us to unlock the scale of our subscriber base to drive growth of our Sportsbook, driving down acquisition costs. The Fubo Sportsbook app features our “Watching Now” proprietary functionality, which updates in real time with relevant bets based on what the user is watching on fuboTV - even as they change the channel to a new game. This seamless connection between streaming video and our mobile betting app - all within the fuboTV ecosystem - is a feature we believe only fuboTV has brought to market and requires a close connection between these two apps. We expect to continue to roll out additional product advancements in the coming weeks and months designed to further enhance the customer journey, as this revenue stream continues to grow and mature. We continue to successfully gain market access into new states that are important to both our streaming and expansion strategy. We continue to successfully gain market access into new states that are important to both our streaming and gaming expansion strategy. In August, we announced a sports betting license in Arizona (through a partnership with Ak-Chin Indian Community) which, along with our existing licenses in IA, IN, NJ and PA, represents the fifth state where we have officially announced market access. Market launches are subject to obtaining requisite regulatory approvals in each state.”
Upside Guidance
The Company raised its Q4 2021 guidance and expects Q3 2021 revenues between $205 million to $210 versus $173.95 million consensus analyst estimates. The Company expects membership to grow to 1.06 to 1.070 million subscribers.
Conference Call Takeaways
CEO Gandler cut to the chase, Ad revenue grew 147% year-over-year and accounts for 12% of total revenue in the quarter. Alongside our record revenue growth, we also made meaningful progress towards our profitability goals. Adjusted contribution margin was 12.4% in Q3, that's up a 189 basis points compared to the normalized third quarter 2020 results. This was driven by ARPU expansion with both advertising and subscription, partly as a result of strong execution associated with upsells and packaging. Our attach rate was 2.3%, that's up from 1.8% in the third quarter of 2020. And we sold 2.2 million attachments as of the end of the quarter. It's also illustrative of our ability to expand ARPU and extend the lifetime value of our customers through the provision of additional products and services. This positions us really well to drive adoption of our wagering product. Today, we announced a major milestone towards global expansion with the acquisition of Molotov, France's leading live TV streaming platform with 4 million monthly active users. Molotov operates a freemium business model, which leverages a free tier to drive growth, then upsells customers to premium channel packages. The technology capabilities between the companies will enable us to efficiently launch our interactive sports and entertainment streaming platform on a global scale. Our transaction is expected to close sometime within the first quarter of 2022, and that's of course subject to certain closing conditions. Our internally built technology stack is the cornerstone to our platform, and that has kept us innovating ahead of the streaming industry. We are prioritizing our product and engineering capabilities to bring to market a category defining streaming experience that's characterized by interactivity.”
He continued, “This is a long-term commitment we're making in our product and expected to yield strong and defensible competitive advantages over the next few years. Accordingly, we are thrilled to announce the acquisition of Edison AI. Edison is an AI powered computer vision platform with patent pending video recognition technology spaced in Bangalore, India. With Edison AI, we will be able to create new experiences that integrate interactivity and data directly within our live TV feeds, pushing the boundaries of innovation even further. The acquisition also expands our data science and engineering organization globally. Last quarter, we announced the beta release of 2 new interactive features, FanView and free-to-play predictive games. Throughout Q3, we continue to iterate on each and expanded their rollout to additional leagues. We're very excited about the potential to further engage our subscribers and ultimately to become gateways to real money wagering. Here's a quick video. Our wagering business also continues to evolve. We are transforming how consumers watch and engage with live television with our first-generation integrated Fubo Sportsbook, which launched November 3rd in our first state, Iowa. This is the first of a healthy pipeline of other states, where we plan to launch in the ensuing months, which will allow us to unlock the scale of our growing subscriber base, driving down betting acquisition costs. In addition to serving as an important new on-ramp to our platform, we believe this will over time improve engagement and retention while driving monetization and advertising sales. We believe only Fubo TV has brought to market this seamless connection between streaming video and our mobile betting app. We see ourselves in the very early innings of an enormous opportunity to innovate. While we are very pleased with our progress to-date, we are taking a very measured and deliberate approach as we operationalize this initiative.”
FUBO Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a precision view of the landscape for FUBO stock. The weekly rifle chart coiled to peak at the $34.22 Fibonacci (fib) level. Shares promptly collapsed as it back under the weekly upper Bollinger Bands (BBs) at $33.72. The contraction period appears to be developing into a price range expansion period as the BBs expand outwards. The weekly 5-period moving average (MA) at $27.42 is attempting to cross down through the 15-period MA at $27.30. The weekly stochastic crossed back down as the weekly market structure high (MSH) sell triggered on the fall under $29.12. Shares fell below its weekly market structure low (MSL) buy trigger at $26.66. The daily rifle chart has been selling off since earnings causing the daily stochastic to form a full oscillation down and smothered under the 10-band. The daily 5-period MA is falling at $23.23 with daily lower BBs at $17.57. Prudent investors can watch for opportunistic pullback levels at the $20.35 fib, $18.47 fib, $15.90 fib, $14.29 fib, $13.33 fib, $11.06 fib, and the $9.67 fib level. Upside trajectories range from the $27.70 level up towards the $38.00 fib level.
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