If FUBO can get a weekly close this month above above its 1W 20D MA, $3.75, it could gap up by the end of the year to its 50D MA, currently sitting at $12.86.
The market conditions appear to be turning a corner, and FUBO finally beat its EPS estimate in Q2 2022, losing less than expected this past quarter. The fundamentals of the business model are questionable, and many doubt that it could ever turn a profit, but with peak season of North American sports approaching as well as the 2022 World Cup, it appears that FUBO has finally turned a corner after bottoming at $2.32 on July 5th.
Closing this week at $3.47 is a far cry from its highs of $62 in late December 2020. Yet FUBO increased its paid North American subscriber base last quarter by 41% to 947K, and expects 1.35 million paid subscribers by the end of the year. FUBO also expects year-end revenue to be between $910 - $930 million. In addition, FUBO has decided to axe its costly sportsbook ambitions.
Its $3.47 close sits comfortably above the shorter term daily moving averages, which are below $2.85. A short period of consolidation could follow after this rapid upward move since July 26th, but if FUBO gets a weekly close above $3.75 - $4.00 it could be off to the races. Its 1W 100D MA currently sits at $19.33, which is converging on its first Fib retracement level of 0.236 (measured from All Time High to All Time Low). That retracement level sits at $16.41. I could see FUBO approaching that $16 resistance by the end of the year if 3 things happen:
1. North American sports and World Cup hype drive FuboTV subscriber growth in Q3, and their product provides users with high quality content and a smooth experience. Early reviews from Canadian viewers watching the English Premier League on FuboTV aren't great, so hopefully the streaming quality improves. They currently have nearly $400 million cash on hand. There is no reason they can't engineer a better product.
2. The Q3 earnings report in November/December needs to be impressive. Their losses need to continue to decrease. In Q3 2021 their reported EPS was -0.59, and in Q1 2022 their EPS ballooned to a dreadful -0.89. Per their latest report they now have that number down to -0.63, but they're still losing money YoY. EPS for Q3 2022 needs to be under -0.59. If it's significantly under that number--let's say -0.50, and their reported revenue improves from from $221 million closer to $250 million, it could be off to the races.
3. This is an obvious one but it has to be said. Macro conditions must continue to improve: no additional major global conflicts, Monkeypox and Covid stay relatively under control, minimal American midterm election chaos, and inflation decreases while the Fed eases up on aggressive interest rate hikes. Investors need reasons to be hopeful.
Let's see what the rest of 2022 has in store for FUBO, one of the most heavily shorted stocks on the NYSE (30.02%) as of 7/15.
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Disclaimer: the projected price movement drawn on this chart isn't overly technical if you couldn't tell. I believe the stock could reach $16 by 12/31/2022, but it'll be a minefield at times. Any slip in macro conditions or FUBO's fundamentals could blow this up. Or maybe I'm just flat out wrong and there's no chance FUBO will return to double digits this millennium.
Only time will tell. For now, I'll put my money where my mouth is.
PT: $16.00 by EoY. Over 300% from here.
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This is getting interesting...
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If not over $6.00 by the end of the month, I'll consider this completely invalidated. For now, I still expect FUBO to be approaching $16 by the end of the year. The market is looking up after a year of fear.
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There's little appetite for risky stocks right now. The only risk-on assets that seem to be performing decently are BTC and cryptos. I still have faith in FUBO, and I'm holding December and January $5 calls, as well as 400 shares in my 401k. I will not be adding to my FUBO position any time soon, but I'm holding out hope that the situation improves with positive earnings next Thursday as well as the World Cup next month.
If the macro environment remains bearish, FUBO has no chance of bucking the trend.
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I sold all FUBO shares and closed the few long calls that I had following the cyber attack on December 14th and their unsatisfactory response. I'm no longer convinced that they'll avoid bankruptcy, let alone turn a profit. The service is too expensive to justify the channels they're losing (AMC Networks - AMC, BBC, IFC, etc.) and the partnerships their competitors are picking up (YouTubeTV - NFL Sunday Ticket). YoutubeTV and Sling, among others, offer more affordable options. Canadian users are also frustrated by FUBO's unprecedented use of commercial advertising in the middle of English Premier League games. There are red flags all around and the macro environment is still garbage. FUBO may yet rebound, but I'm chalking this up as a loss and will never touch the stock again.
Excellent analysis. After buying CVNA at $23 3 weeks ago, I gradually sold between $45-$50 and rotated profits into FUBO - starting with position at $2.85. I'm holding through the next several months and will increase my position if necessary. Like you say, Q3 report will be huge for them. If the stock can rise to $10+ prior to that, I'm trimming. Good luck, thanks for posting.
wazza_10
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@Midnight_Trades, Thanks for the response! I looked at your CVNA charts, you nailed it. Great starting position on FUBO too. I entered at $3.47 but will DCA if it stays stagnant for long, or drops much from here. That Q3 report will be crucial and yeah, it could approach $10+ before earnings with an impressive beat propelling it to $20+ in 2023. At the very least, the risk-reward ratio with an entry around $2-3 seems well worth it, IMO. Best of luck, we'll see what happens.
Midnight_Trades
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@wazza_10, Thanks! My biggest concern for FUBO's stock price is continued share dilution, but I can certainly see $20+ early next year like you said if we can get an impressive Q3 & Q4 - this would put FUBO at roughly +4B in market cap which I could see happening in that scenario.
wazza_10
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@Midnight_Trades, I agree with the share dilution concern. Any further shelf offerings would have a major impact on the stock price. 4B market cap is certainly within the realm of possibility in the near future if FUBO's financials keep improving, and this time it would be a fair value. The stock looks good so far this week.
@CONative17, even with FUBO's positive earnings numbers and the World Cup coming up, the current macro environment is garbage and FUBO is still a long ways from making a profit. That is not a recipe for success right now. I haven't sold anything, but I won't be adding to my position any time soon.