Broadband And Cord Cutting Will Drive Live Sports Despite Risks

Key Takeaways

• fuboTV is well positioned to capitalize on the consumer shift from cable to streaming, leveraging major sports rights migration and international expansion for long-term growth.
  
• The company's interactive advertising strategy and advancements in streaming technology are set to boost ad revenue, margins, and subscriber retention.
  
• Declining subscribers, rising costs, falling ad revenue, weak tech differentiation, and a focus on profitability over growth threaten competitiveness, margins, and long-term revenue stability.

Catalysts

Operates a live TV streaming platform for live sports, news, and entertainment content in the United States and internationally.

• Analyst consensus views the Hulu + Live TV combination as unlocking scale advantages, but this transaction could spark an inflection point for profit and subscriber growth, as the combined entity becomes the single dominant aggregator for streaming sports and live content, attracting premium advertising dollars and driving rapid ARPU and EBITDA expansion.
  
• While analysts expect new sports bundles and competitive offerings to boost growth, fuboTV is uniquely positioned to capitalize on the accelerating consumer shift from cable to streaming, and could see outsized subscriber and revenue growth as major live sports rights increasingly migrate away from traditional TV providers.
  
• The company's focus on interactive and gamified advertising, already demonstrating 30–40 percent annual growth, positions fuboTV to capture a disproportionate share of the booming programmatic advertising market, potentially transforming ad revenue and margins as digital ad budgets continue to shift to connected TV.
  
• International expansion, with a unified platform rollout and disciplined investment, provides an underappreciated lever for long-term subscriber and revenue growth, especially as global demand for premium sports and live content expands and broadband infrastructure improves worldwide.
  
• Rapid advancements in broadband and 5G networks will further enhance streaming quality and mobile viewing, increasing consumption and improving user retention rates, directly supporting higher lifetime value per subscriber and improving path to sustainable profitability.

fuboTV Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on fuboTV compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming fuboTV's revenue will grow by 7.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 4.3% today to 2.4% in 3 years time.
• The bullish analysts expect earnings to reach $47.5 million (and earnings per share of $0.08) by about August 2028, down from $70.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 61.8x on those 2028 earnings, up from 19.0x today. This future PE is greater than the current PE for the US Interactive Media and Services industry at 16.1x.
• Analysts expect the number of shares outstanding to grow by 3.71% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.76%, as per the Simply Wall St company report.

fuboTV Future Earnings Per Share Growth

Risks

• The decline in both North American and Rest of World subscriber numbers, as well as management's explicit focus on profitability over growth rather than driving scale, poses significant risk to future revenue growth and could limit the company's ability to improve operating leverage.
  
• FuboTV continues to face significant pressure from rising content and sports licensing costs, with management highlighting the importance of securing programming "at fair rates," yet competition from larger streaming platforms could make affordable deals increasingly challenging, negatively impacting long-term net margins.
  
• The major year-over-year drop in advertising revenue-down seventeen percent-reflects both the real impact of content discontinuations and structural vulnerability to content partner negotiations, which undermines the company's ability to diversify and stabilize earnings.
  
• Management's lowered guidance for the second quarter, with a fourteen percent expected subscriber decline and a ten percent anticipated revenue decline in North America, signals heightened vulnerability to broader secular trends such as consumer belt-tightening and proliferation of free ad-supported alternatives, contributing negatively to future revenues and possibly increasing churn.
  
• FuboTV's lack of meaningful technological differentiation and its smaller scale versus giants like YouTube TV and Hulu Live hamper its ability to benefit from accelerating innovation and scale-driven margin expansion, raising the risk that it will persistently lag in profitability improvements and may have to raise capital repeatedly, diluting shareholder value and depressing future earnings per share.

Valuation

• The assumed bullish price target for fuboTV is $6.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of fuboTV's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $6.0, and the most bearish reporting a price target of just $4.25.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $47.5 million, and it would be trading on a PE ratio of 61.8x, assuming you use a discount rate of 8.8%.
  
• Given the current share price of $3.92, the bullish analyst price target of $6.0 is 34.7% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.