The value of FuboTV shares surged by roughly one quarter in after-market stock trading action yesterday after the company reported that it doubled both its subscriber base and revenues compared to a year ago as its streaming service continues to attract sports fans.
By the end of the first quarter, FuboTV’s revenues landed at $119.7 million for a 135% jump compared to a year ago, while the number of subscribers moved 105% higher to 590,000. Both figures surpassed analysts’ estimates for the quarter, as the consensus revenue forecast saw Fubo’s top-line landing at $103.9 million by the end of the three-month period.
Meanwhile, on a quarter-on-quarter basis, FuboTV managed to add 43,000 new subscribers to its platform while the average revenue per user grew from $54.16 last year to $69.09 by the end of March 2021.
Moreover, the business’ adjusted contribution margin, a measure that tracks the gross proceeds obtained by the firm after deducting the cost of broadcasting rights, moved 230 basis points higher to 5.3% as advertising revenue for the period more than tripled, landing at $12.6 million.
Finally, the company, which has been deemed by some as the Netflix (NFLX) of sports, reported a net loss of $70.2 million, which is higher than the $66.6 million the firm shed a year ago but lower when compared to revenues as the net loss margin was cut by more than half from 130.5% to 58.6%.
In regards to the future, the management team raised its guidance for both the next quarter and for the full 2021 fiscal year amid what the company’s Chief Executive David Gandler qualified as an “inflection point” for the business, with sales expected to land at $530 million for the year – a 78% in the firm’s previous guidance – while subscribership is expected to jump to 850,000 users for a 40% increase compared to the management’s past forecasts.
These results appear to have dazzled investors, as shares of the sports streaming company surged 22.5% at $21.65 after the report was published, following a positive session that ended with an 8% leap in the stock price as well.
FuboTV secures rights to stream World Cup qualifying games
Among other interesting news, FuboTV announced that it acquired exclusive streaming rights for an event that they believe is “one of the most popular World cup qualifying tournaments”, which is the CONMEBOL Qatar World Cup 2022 qualifiers.
The CONMEBOL is a South American entity that organizes competitions among local clubs and national teams within the continent, including World Cup qualifiers. According to Fubo, many of the world’s top soccer stars including Lionel Messi and Neymar compete in these qualifying rounds and they attract significant viewership while they highlighted that these matches are followed by both English and Spanish-speaking audiences.
The company expects that streaming these qualifiers could help them attract more new subscribers to the platform while also strengthening engagement levels and monetization efforts via higher advertising revenue. Additionally, the company stated that this is an important investment that paves the way for the upcoming World Cup.
FuboTV is also planning to introduce a sports betting service by the fourth quarter of this year upon securing regulatory approval along with introducing a free-to-play gaming feature.
What’s next for FuboTV shares?
If we include today’s 20% leap to estimate the total market capitalization of the firm, the value of FuboTV’s equity would be propelled to $2.8 billion at least. Meanwhile, based on the management’s 2021 guidance, the forward price-to-sales (P/S) ratio for the firm would land at 5.2.
Although we cannot predict if FuboTV will continue to grow in the near future at the same pace it did in this past quarter, if we estimate that its subscriber base will grow at a slower rate of 50% per year from 2021 to 2023 while the average revenue per user keeps moving higher at a rate of 25% per year – in line with historical trends – we could see Fubo’s 12-month revenues landing above the $1 billion mark by the first quarter of 2023.
That results in a forward P/S ratio of 2.8 that is quite conservative for a firm growing at this speed. That particular forecast explains why the market is so excited about the stock after this report was published while the price action could get even wilder once the bell opens as the future looks bright for this sports streaming company.
