FuboTV (FUBO) Gains on Preliminary Q3 Results, Exits Fubo Gaming


FuboTV Inc. (FUBO Quick QuoteFUBO ) shares jumped 14.3% in after-hours trading on Oct 17 after the company announced its preliminary third-quarter results. Revenue and subscriber growth in North America are expected to exceed the previously issued guidance.

For the third quarter, FUBO expects to report revenues of $210 million in North America, up 34% year over year and better than its prior forecast of $200-$205 million.

FUBO’s paid subscribers in North America are anticipated to exceed 1.22 million in the third quarter, in comparison with its earlier projection of 1.135-1.155 million. The expected figure implies an increase from 947,000 subscribers at the end of the second quarter and 27% year over year.

As for ROW (Remainder of World), revenues are anticipated to be $5.5 million, within the prior guidance of $5-6 million. Paid subscribers in ROW are expected to reach 350,000, within the guided range of 340,000-360,000.

The company expects to post a negative pre-tax profit of $100 million in the quarter. Cash and cash equivalents are expected to be at least $300 million at the end of the quarter.

FUBO expects to report a negative adjusted EBITDA of $100 million in the third quarter, which indicates a further widening of the losses. The company has not posted a profit since it launched in early 2015.

What FuboTV lacks in profit is made up for in part by subscriber growth. In August, Fubo TV had more than 947,000 subscribers who were shelling out $70 or more per month to access dozens of Internet-streaming live cable channels, including ESPN, Fox Sports, BeIN Sports and CBS Sports networks. That number is expected to climb more than 1.2 million.

Fubo’s Online Sportsbook to Shut Down in the United States

Separately, FuboTV announced that it is shutting down its subsidiary Fubo Gaming and ceasing operations of its owned and operated online sports betting operator, Fubo Sportsbook, effective immediately.

The announcement was made in a filing with the Securities and Exchange Commission in which FuboTV said that its board had approved the dissolution of its sports betting subsidiary Fubo Gaming. The company suggested that the continuation of Fubo Gaming and Fubo Sportsbook in a challenging macroeconomic environment will impact the company’s ability to meet its long-term profitability goals.

The end of its sports betting business will cost FUBO more than $70 million and lead to some employee layoffs. Some workers assigned to that part of the business are expected to receive severance packages.

This Zacks Rank #2 (Buy) company will announce its full third-quarter 2022 earnings on Nov 4, 2022, where it will provide more details on the Fubo Gaming shutdown. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The move comes two months after FuboTV said it was placing the sports betting part of its business under strategic review. At that time, Fubo officials were hoping to find a partner for sports betting as the sports-centric TV streaming platform service could not operate independently.

The sportsbook was launched in Iowa last November and in Arizona a month later. It went live in New Jersey just last month.

Sports betting is a highly competitive industry, with Fubo Sportsbook having to compete against the likes of FanDuel, DraftKings (DKNG Quick QuoteDKNG ) , and BetMGM, which have the majority of the market share. While DraftKings has been boosting its online sportsbook with a recent launch in Kansas, FUBO intends to pull back from it and is looking to partner with somebody. The change in the gaming market in the last few years and the ongoing uncertainty of recession and inflation have moved Fubo’s confidence in it.

The launch of TMB’s FAST channels on FuboTV in the second quarter is anticipated to be part of the company’s strategy to grow its content offerings. With growth in the content offering, FuboTV expects to drive its ad revenues and paid subscriber growth.

The company faces stiff competition from DISH Network’s (DISH Quick QuoteDISH ) Sling TV. DISH’s Sling TV packages, including Sling Orange and Sling Blue, are two of the industry’s lowest-priced linear online streaming services.

Earlier this year, Amazon (AMZN Quick QuoteAMZN ) revealed that Amazon customers would be able to access their favorite on-demand and live entertainment shows via SLING TV on Amazon’s Echo Show 15 smart TV.

The launch expands SLING TV’s reach to Amazon Echo Show customers and provides current SLING TV subscribers more flexibility and control over their viewing content.

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