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Why fuboTV Stock Dropped Monday

What happened

Shares of fuboTV (NYSE: FUBO) dropped more than 10% Monday, but pared that decline to end the trading day down 8.5%. Today's drop brings the one-month decline in the stock to more than 36%, as it hovers near lows not seen since last fall. The company began trading publicly in October 2020.

So what

Since its public debut, fuboTV has traded like a rollercoaster. It was at one point over $60 per share, then back below $30 per share, and has repeated a similar cycle this year. The company is still an unprofitable, high-growth name in the streaming television market, and trades with investor anticipation and speculation. There is no specific news from the company or through an SEC filing today, making today's move more likely due to general market sentiment.

Image source: Getty Images.

Now what

The most recent significant news from the company was positive for the growth story, as it gained exclusive rights to a major soccer event. Fubo announced its fourth-quarter results in early march, telling investors it crossed the $100 million revenue threshold in a single quarter for the first time. Overall 2020 revenue grew 83% versus 2019, and management guided for 73% revenue growth in 2021 at the midpoint of estimates.

With the decline in the stock, the company trades at a forward price-to-sales ratio of about 6.5 right now, based on the company's 2021 guidance. If anticipated moves to integrate sports betting to the service and to add sportsbooks are executed well, the valuation is attractive right now. But if competition or poor execution interferes, the hope for high profitability may be dampened. Those are the reasons investors should keep fuboTV as part of a speculative portion of a portfolio.

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Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends fuboTV, Inc.. The Motley Fool has a disclosure policy.


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