The Bull Case for FuboTV Is Growing Stronger

Previously, I’ve taken a cautious view of FuboTV (NYSE:FUBO) stock. The company, a combo streaming/sports betting play, appeared to be at a long-term disadvantage, due to the high competition from larger, deeper-pocketed rivals.

In hindsight, that appears to be a short-sided view. Taking another look at the details, it’s clear there’s more than just hype in its corner. The speculators who bought this during last month’s Reddit-fueled short squeeze wave may be barking up the right tree. A squeeze in this situation doesn’t hinge on just another round of meme stock madness.

Instead, as the company continues to deliver strong growth in both its subscriber base and revenues, investors, not just speculators buying it on momentum and hype, will dive back in. Admittedly, it has hurdles to climb when it comes to scaling up its planned sportsbook operation. Yet, when it comes to streaming, the fact it’s partnered with big media may signal that it’s not at risk of getting muscled out.

Put it all together and going long as FUBO stock pulls back may be a winning move. It could take time for it to all play out, but this stock has potential to deliver solid gains in the years ahead.

Why You May Want to Pounce on the Pullback

As of this writing, FuboTV shares are pulling back. After its Reddit rally from under $20 per share in early May, to nearly $35 per share in late June, shares are back to around $28 per share. Further declines may be in the cards.

Does this mean you should hold off on FUBO stock? At least, until tumbles back to $20 per share, or even below $15 per share? Not exactly. Its ascension from bit player to major sports-focused streaming service may still be in its early stages.

But who’s to say it’ll fall back to $15 per share? Or the single-digit prices it traded for before it appeared on investor’s radars, for that matter? It’s not just increased investor awareness that’s changed. Over the past year, FuboTV has seen a dramatic increase in its subscriber and revenue numbers.

Not only that, through carriage deals, its platform has become a stronger cable substitute, rather than an also-ran streaming package. With its service offering up 42 of the top 50 cable networks, it’s not hyperbole to say this could be one of the best cord-cutting plays out there.

Positioned to meet, and possibly beat, its raised 2021 guidance numbers, you may not want to wait for it to fall back near prior lows (because it may not happen).

Big Media Isn’t Looking to Muscle it Out of Business

The bear case for FUBO stock is based mainly on the competitive challenges it faces in penetrating the sportsbook and streaming markets. When it comes to grabbing market share from sports wagering rivals, it’s going to be tough.

Pure play sportsbook operators like DraftKings (NASDAQ:DKNG) have first-mover advantage. Legacy casino gaming giants, like MGM Resorts International (NYSE:MGM), have an advantage over this early-stage sportsbook operator as well.

When it comes to competition with big media in the streaming space? FuboTV doesn’t appear to be at risk of getting crowded out by big media. As InvestorPlace’s Dana Blakenhorn wrote June 25, via the carriage deals, three of the major media conglomerates hold stakes in it, with NBC Universal parent Comcast (NASDAQ:CMCSA) holding a larger share of it.

This may or may not mean that Comcast buys them out at some point. At the very least, it points to big media supporting its rise. As a move to minimize the ability of big tech giants like Amazon (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) to dominate content distribution, once streaming fully supplants legacy broadcast and cable television.

Putting it simply, FuboTV has challenges ahead when it comes to turning its upcoming Fubo Sportsbook into a profit center. With big media as its partners, however, its prospects of scaling into a large enough platform to be profitable appear solid.

The Bottom Line on FUBO Stock

Projected to remain in the red for at least several years, it’ll be a while until FuboTV scales to profitability. Competition is heating up in both industries it’s targeting (sports betting and streaming). Gaining enough market share from sportsbook market leaders like DraftKings may be tough. But when it comes to streaming? Its relationship with big media may help ensure it doesn’t get muscled out.

Given its improving odds of long-term success, don’t wait for FUBO stock to fall back to $15 per share (or lower), as that may not happen. Instead, pounce on it as it falls back following the recent Reddit rally.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.