FuboTV Shares Drop Again As Lock-Up Expires And Bears Tune Out Streaming Service
FuboTV’s yo-yo action on the New York Stock Exchange continued today as shares in the streaming service fell 14% to $33.25 amid a noisy debate about the stock’s potential.
It was the fourth day of the last five that Fubo has lost ground in a major reversal from last week’s runup past $62 a share. The bulls-versus-bears debate about the streaming bundle purveyor has been intensifying at the close of the year.
One clear reason for today’s selloff was the expiration of a lock-up agreement in the company’s initial public offering in October. As of today (December 30), about 88 million shares — more than triple the previous “float” — became eligible to be sold. That means a number of new investors were able to take profits if they want to lock them in, with even the diminished price more than double the IPO level.
Bulls see Fubo as a game-changing tech firm that will go on to greater glory in the manner of Roku, Netflix and other high-fliers. Rather than merely replacing conventional pay-TV, they say, the company can use its technology to integrate sports betting or other custom content, making it a compelling option for sports fans fleeing the traditional bundle.
Bears see notable gaps in programming (it recently parted ways with WarnerMedia, for example, ditching networks like TNT and TBS) as well as the intensifying challenge of customer acquisition. Internet bundles like Sling TV and YouTube TV, it is pointed out, have existed for years, as has Fubo, which was founded in 2015. They promise a lot less friction than the usual box-and-truck cable TV experience and yet they make up just a fraction of the total TV operator universe.
Either way, it is still early days for Fubo, which reported having 455,000 subscribers at the end of the third quarter, a bit less than 10% of the total for top rival Hulu + Live TV, which is newer to the sector.
Today’s closing stock price is far below last week’s peak, which gave Fubo a $6.5 billion value on paper, but it is well above the $13 it commanded on October 7, when it went from the over-the-counter hinterlands to a NYSE listing. Among the bulls on Fubo is Laura Martin, an analyst at Needham who is known for her skepticism on Netflix. She reaffirmed her “buy” rating on Fubo shares last week and issued a $60 price target.
On Monday, hedge fund Islet Management disclosed a 7% stake in Fubo. Partly as a result of carriage deals, media companies like Disney, Discovery, AMC Networks and others have also wound up owning shares in FuboTV. Edgar Bronfman Jr., a veteran media executive and investor known for CEO stints at Warner Music and Vivendi Universal, became the company’s executive chairman earlier this year.
Trading volume was nearly eight times normal levels today, though, with the bears carrying the day. BMO Capital Markets issued a downgrade on Fubo last week, one of a few negative assessments to surface. Rich Greenfield, an analyst and pundit who has a big social media presence and a blog hosted by his firm, Lightshed Partners, dismissed Fubo in a post as a “most attractive short,” slapping an $8 price target on its shares. Kerrisdale Capital followed with a short call today.
As boosters and naysayers jockeyed on Twitter, venture investor and former Amazon executive Matthew Ball observed in a tweet, “I’ve personally never seen such ridicule and confusion before.”
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