FuboTV Up on Revenue Estimate, Needham Optimism

Fubo, which has a heavy emphasis on sports, estimated fourth-quarter revenue at a stronger-than-expected $94 million to $98 million. The shares are higher.
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FuboTV  (FUBO) - Get Report shares soared Tuesday after the streaming company estimated that  fourth-quarter revenue came in stronger than expected.

In addition, Needham analyst Laura Martin said the streaming company's stock has likely hit bottom, thanks to strong fundamentals.

The New York company's stock recently traded at $29.65, up 22%. That’s after the shares dove 61% from its Dec. 22 close through Monday. 

Martin reiterated her buy rating and share-price target of $60.

Fubo, which has a heavy emphasis on sports, reported preliminary fourth-quarter revenue of $94 million to $98 million, up from its earlier estimate of $80 million to $85 million. 

The Bloomberg analyst consensus called for $87.1 million. The company also lifted its projection for paid subscribers.

Fubo's recent stock drop stemmed from “an enormous supply/demand imbalance” that developed when a share lockup for company insiders expired, Martin wrote in a commentary cited by Bloomberg.

“About 160 million Fubo shares ($5.6 billion of value) have traded in the past three trading days, so this week should be Fubo's lowest share price,” Martin said, according to Seeking Alpha. 

“The supply imbalance will subside, and fundamental drivers will reassert priority.” 

Positive factors for Fubo include stronger-than-expected subscriber growth, a live sports button on Hisense's Vidaa TVs available at Walmart  (WMT) - Get Report and new wagering revenues to begin in the next year, Martin said, according to Seeking Alpha. Strong connected-TV demand and strong revenue also should help.

Meanwhile, on Dec. 24 LightShed Partners analysts, including Rich Greenfield, called Fubo “maybe the most compelling short we have ever identified in our career as analysts.” They launched coverage with a sell rating and an $8 price target.

“Over the past few months, we have seen numerous examples of companies with valuations that defy logic,” the analysts wrote. 

“We understand the broader market dynamics at play with cheap money and an exuberant retail investor. However, the runup in Fubo shares is just plain egregious.”

In the five trading days through Dec. 22, the stock had more than doubled to $62.  The stock closed Dec. 24 trading at $44.18.