Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

The Junk Pile

Does fuboTV make money?

fuboTV Inc. (NYSE: FUBO) is a different sort of streaming service. To explain, fubo does not create programming or sell individual programs.

Instead, fuboTV (FUBO) offers access to an enormous portfolio of television networks. Hence, you can consider fubo as cable TV through the internet.

Notably, fubo’s platform contains almost all the popular US cable channels such as AMC, Fox News, BET, CNBC, CMT, Comedy Central, MTV, Showtime, and FX. Similarly, to cable or satellite TV, fubo offers several subscription plans. Each plan contains many channels of television and up to 1,000 hours of cloud DVR.

Unlike other streaming platforms, fuboTV’s monthly cost is high. For instance, the Starter package costs $64.99 a month.

Can fuboTV’s Business Plan work?

I suspect fubo’s business plan is to appeal to viewers who prefer a traditional television experience. Thus, fuboTV seems designed by Baby Boomers or Generation Xers for Baby Boomers and Generation Xers.

Thus, fuboTV ignores younger viewers who watch one program or movie at a time on Netflix (NFLX). Fubo’s website pushes programs such as ESPN sports, Fox News, and MSNBC. I think fubo repels people under 40.

Strangely, that business plan could work because there are 69.56 million Baby Boomers (born 1946-1964) and 65.17 million Generation X (born 1965-1980) in America, Statista estimates. However, there are also 72.17 million Millennials (born 1981-1996) and 67.17 million members of Generation Z (born 1997-2012).

Thus the total number of Millennial and Generation Z (139.34 million) people outnumbers Boomers and Generation X (135.26 million). Moreover, the Boomer generation is shrinking as boomers die off. Notably Incendar’s Baby Boomer Death Clock estimates that 5,097 Boomers die each day.

Can fuboTV compete with Disney and Netflix?

I think fuboTV (FUBO) will have a hard time appealing to Millennial and Generation Z viewers because they are used to paying a cheap price for content they chose. Fubo’s audience is the older viewers who are used to having programming chosen for them by network executives.

Notably, Netflix’s Basic Plan costs $8.99 a month, while the Premium Plan costs $17.99. Similarly, Disney+ costs just $7.99 a month. Plus, bundles of Disney+, Hulu, and ESPN+ plus start at $13.99 a month, Business Insider reports.

I have to wonder how fuboTV can compete with Disney+, Netflix, and other streaming services. Remember, cheapest fuboTV subscriptions cost $64.99 a month or over six times as much as Netflix Basic or Disney+.

Conversely, fuboTV’s subscriber base grew by 73% to 547,880 in 2020, Variety estimates. In particular, fuboTV attracted 92,800 new subscribers in the fourth quarter of 2020.

 fuboTV loses money

Currently, fuboTV (FUBO) loses money. For instance, fuboTV reported a quarterly operating loss of -$92.31 million on 31 December 2020. In 2020, the quarterly operating loss grew from -$19.80 million on 31 December 2019.

However, fuboTV’s quarterly gross profit grew from -$1.56 million on 31 December 2019 to $4.88 million a year later. Similarly, fuboTV reported a negative quarterly operating cash flow of -$76.57 million on 31 December 2020. That number fell from $470,000 on 31 December 2019.

fuboTV reported a quarterly ending cash flow of $96.08 million on 31 December 2020. Unfortunately, most of that ending cash flow came from the $172.76 million fubtoTV reported on the same day. In 2020, fuboTV’s quarterly financing cash flow grew from $1.37 million on 31 December 2019.

Conversely in 2020, fuboTV’s total debts fell from $44.65 million on 31 December 2019 to $24.25 million on 31 December 2020.

fuboTV’s Incredible Revenue Growth

fuboTV has undergone an incredible level of revenue growth. For example, Stockrow estimates fuboTV’s revenue grew by 6,822.78% in the quarter ending on 31 December 2020.

Additionally, fuboTV’s revenues grew by 20,163.89% in the quarter ending on 31 March 2020. Overall, fuboTV’s revenues grew from -$1.56 million on 31 December 2019 to $105.18 million on 31 December 2020.

Thus there is some evidence fuboTV’s business model could work or make money. Although, the highest level of revenue growth occurred during the first month of the COVID-19 pandemic. I think fuboTV’s revenues exploded because many people were stuck at home with nothing but watch TV.

fuboTV has achieved revenue growth by burning cash. Unfortunately, there is no guarantee that revenue growth is sustainable.

What Value does fuboTV have?

Similarly, fuboTV’s (FUBO) value is growing. For example, fuboTV’s total assets grew from $368.22 million on 31 December 2019 to $859.35 million on 31 December 2020.

Plus, fuboTV’s cash and short-term investments grew from $7.62 million on 31 December 2019 to $134.94 million on 31 December 2020. Hence, fuboTV is gaining value.

I think investors need to avoid fuboTV because all this company offers is growth. For instance, fuboTV’s share price grew from $7.40 on 6 April 2020 to $22.38 on 6 April 2021 and fell to $20.70 on 8 April 2021.

you just want growth, fuboTV is a bargain. Investors that want more than growth such as income, cash, a margin-of-safety, and dividends need to avoid fuboTV (FUBO). In the final analysis, I see no reason for anybody to own FUBO stock.