Wedbush Analyst Sees FuboTV Stock Reaching $9 Despite Big Losses
FuboTV (NYSE:FUBO) reported its first quarter of 2022 earnings on May 5 after the markets closed, and FUBO stock is down 18.6% since. While the sports-focused video streaming platform reported 102% revenue growth over last year, the 101% increase in its GAAP losses has spooked some but not all investors.
In fact, Wedbush analyst Michael Pachter is one of the optimists. He believes that despite the 69-cent adjusted loss per share in Q1 — 16 cents worse than the analyst consensus and 28 cents higher than Q1 2021 — FuboTV is on its way to becoming earnings before interest, taxes, depreciation and amortization (EBITDA) positive.
Moreover, Pachter thinks FUBO stock should be on your potential buy list if you’re a speculative investor — and I agree.
FUBO Stock and $9 Target
As I say in the headline, the Wedbush analyst has a 12-month target price of $9 — down from $15 — along with an “outperform” rating. Of the 11 analysts covering FUBO stock, five give it a “buy,” five have it at “hold” and one rates it a “sell” with an average target price of $8.16.
Positives mentioned by Pachter in his note to clients include rapid subscriber growth, a price increase to cover higher content costs, and keeping spending under control through manageable growth.
“Notwithstanding its precipitous share price decline, we think fuboTV is focusing on the right things,” Pachter said about FuboTV.
When I last wrote about FUBO at the end of April, I felt the risk/reward proposition at $4 was tilted in the aggressive investor’s favor. At $3.35, I don’t believe the streaming platform’s Q1 2022 results change the equation. So, I agree with Pachter that its share price has excellent upside potential despite the doom and gloom surrounding FUBO.
Why Aggressive Investors Should Buy
Two things I suggested investors pay attention to from its earnings report and conference call were advertising revenue and its sportsbook business.
Despite a weaker ad market, the former experienced 81% year-over-year (YOY) growth to $22.3 million. However, because of the big jump in subscribers, its average advertising revenue per user (ARPU) fell 5% YOY to $6.87.
The FUBO sportsbook is live in two states: Arizona and Iowa, with more to come in 2022. It had a loss of $301,000 in revenue and total adjusted operating expenses of $9.96 million in the first quarter. The negative revenue results from spending more on incentivizing bettors to bet on Fubo Sportsbook than it took in from bettors. That’s normal in online sports betting.
With three revenue streams heading into the second half of 2022, Fubo shareholders have a shot to get back to $10, but as Pachter says, it’s got to string along “several quarters of strong performance.”
Therefore, if you’re an aggressive investor, I’d consider buying at these prices. If you’re not, though, I’d wait for at least one quarter, if not two, for confirmation it’s headed in the right direction.
On the date of publication, Will Ashworth 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.
