Deep Dive: FuboTV
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What do they do? FuboTV is a virtual multichannel video programming distributor or vMVPD. Essentially, it allows customers to subscribe to the cable bundle over the internet.
History? It was founded in 2015 by David Gandler (current CEO), Alberto Hirihuela, and Sung Ho Choi. Fubo started as a soccer streaming service but switched to a broader cable package in 2017. During the 2018 World Cup, it was the first live streaming service to offer 4K video, which helped it gain subscribers.
Industry? The general tailwind in the video/TV is to cut the cord and move to streaming instead of cable, which Fubo technically should get a tailwind in (although it is essentially just copying the cable bundle). Some product competitors include YouTube TV, Hulu Live, and Sling TV. It also is delving into the sports betting market, which is very fragmented in the U.S. due to the recent legislation to legalize the industry. Overall, FuboTV operates in large industries, and won’t come across market saturation anytime soon.
Management? CEO is David Gandler, who is also the co-founder. He owns 5% of outstanding shares. Overall, directors and officers own 30% of the company, and Comcast, Viacom, and Disney all own about 4-5%.
Valuation? Fubo TV has a market cap of around $2.16 billion, and the company trades at a sales ratio of in-between 7 and 8 (hasn’t announced Q4 numbers officially yet). It is unprofitable so it doesn’t really have other metrics.
Earnings? Q3 sales of $61.2 million, up 47%. ARPU up 14%, but they are barely break-even on a gross margin basis, and may have a negative gross profit depending on how you calculate it.
Balance Sheet? Should have close to $250 million in cash after its new stock offering. Tons of goodwill which investors need to keep track of, and $46 million in debt.
Potential Competitive Advantages? We had existentialism (at least compared to YouTube TV), access to capital, and an integrated sportsbook.
Potential Future Growth Opportunities? We had their new flights integration, cutting the cord, and sports betting.
Highlights? We struggled to find any, but ARPU growth was solid, accelerating revenue growth, and the potential gambling synergies.
Lowlights? Negative gross margins, high distribution costs, will need to invest billions of dollars to get to scale.
Disclosure: The author is not a financial advisor, and may have an interest in the companies discussed.