Shares in FuboTV, which boomed at the start of the week, have dropped more than 16% today, their second straight day of sharp declines at the end of a roller-coaster week.
At $44.10 midway through the trading day, the stock is near the level where it began trading on Monday. It dropped 15% on Wednesday after reaching an all-time high of $62 the day before.
The internet-delivered pay-TV provider had an IPO on the New York Stock Exchange in October and its stock has more than doubled since then. On Monday and Tuesday, it shot up almost 50% on subscriber growth surpassing internal targets and rumors it was considering streaming some sports events exclusively on its service. (Citing a quiet period, the company has not commented on the speculation.)
Laura Martin, a veteran media analyst at Needham, added to the ebullience around Fubo on Tuesday, reaffirming her “buy” rating on the stock and setting a $60 price target. In a research note, she described Fubo as “an inexpensive way for public investors to participate in the U.S. consumer shift toward OTT and streaming TV.”
On Wednesday, though, Wall Street sentiment swung back in a negative direction. BMO Capital Markets downgraded its rating on Fubo to “market perform” from “outperform.” In a note to clients, the firm’s Daniel Salmon explained that valuation had gotten overheated. Fubo parted ways with WarnerMedia networks earlier this year, so it won’t have a chunk of NBA regular-season games or the NCAA men’s basketball tournament, Salmon noted. That was one reason he said his projections for subscribers are more modest than those of other analysts.
A “sports-first” bundle launched in 2015, Fubo is smaller than the leaders in the internet-TV sector, YouTube TV and Hulu + Live TV, which have a bit more than 3 million and 4 million subscribers, respectively. In its third-quarter financial report, Fubo said it had 455,000 subscribers, up 58% from the same period in 2019.
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