DD on FuboTV Part 2 via /r/wallstreetbets #stocks #wallstreetbets #investing

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Hello,

This is part 2 of my FuboTV DD thread. I will also repost information from the first thread so you don’t have to check both of them.

FuboTV has now increased their base package from 64.99 to 69.99 (Source : https://thestreamable.com/news/fubotv-to-raise-price-by-5-for-existing-subscribers-on-may-1st)

If you check the financial statements of the company don’t forget to account for $5 more per subscriber.

FuboTV has high streaming right costs and their profit will come from advertisements and other revenue like online gambling. It’s the first thing to understand to be able to comprehend the business model of FuboTV.

Consequently FuboTV best chances of profitability is to grow ads revenue per user.

First some numbers with sources :

Users spend 130 hours per month on FuboTV (Source : https://www.cnbc.com/video/2021/08/18/watch-cnbcs-full-interview-with-fubotv-ceo-david-gandler-on-the-future-of-streaming.html 30secs mark)

Price is expected to rise up to $80 in the future for the subscription and ad revenue is expected to rise between $15 and $20 (Source : https://www.cnbc.com/video/2021/08/18/watch-cnbcs-full-interview-with-fubotv-ceo-david-gandler-on-the-future-of-streaming.html 20:45 mark)

Subscribers are expected to rise in the next 5 years between 3 and 5 million subscribers (Source : https://www.cnbc.com/video/2021/08/18/watch-cnbcs-full-interview-with-fubotv-ceo-david-gandler-on-the-future-of-streaming.html 23:40 mark)

16% of revenue is spent on marketing only for 100%+ growth in revenue (Source : https://www.cnbc.com/video/2021/08/18/watch-cnbcs-full-interview-with-fubotv-ceo-david-gandler-on-the-future-of-streaming.html 32:00 mark)

Market size between 45m to 50m americans who are willing to pay $80 a month (Source : https://www.youtube.com/watch?v=BTiG7S-qgeo&ab_channel=CNBCTelevision 1:30 mark)

Profitability will be reached at the 3m range subscribers mark (Source : https://www.youtube.com/watch?v=wU50QfK0soE&ab_channel=TDAmeritradeNetwork 6:00 mark)

Sportsbook customer acquistion cost for other sportsbooks is between $800 to $1000 per customer (Source : https://www.youtube.com/watch?v=rxYNHUW56kQ&ab_channel=Benzinga 1:01:10 mark)

$22 CPM (Source : fool(.)com/earnings/call-transcripts/2022/02/24/fubotv-inc-fubo-q4-2021-earnings-call-transcript/ Laura Martin — Needham and Company — Analyst question Q&A session Q4 2021)

1.5 million subscribers guidance for 2022 (Source : https://www.fool.com/earnings/call-transcripts/2022/02/24/fubotv-inc-fubo-q4-2021-earnings-call-transcript/ Zach Silverberg — Berenberg Capital Markets — Analyst Q&A session Q4 2021)

96% of FuboTV subscribers watch sports compared to 30% on the cable ecosystem (Source : https://www.youtube.com/watch?v=Go-ZENpIj-E&ab_channel=CNBCTelevision 2:25 mark)

CPM for TV ads has been growing every year (Source : https://www.emarketer.com/chart/230277/average-cpm-us-primetime-tv-upfront-ads-broadcast-vs-cable-2008-2020)

Currently $8+ advertising revenue per user per month (Source : https://www.sec.gov/Archives/edgar/data/1484769/000149315221005196/ex99-1.htm)

If FuboTV grows ads revenue from $8 to $12 per user with :

3m subs : Break even, the company becomes profitable.

5m subs : $240m/y profit

10m subs : $480m/y *

From $8 to $16 which is close to the CEOs target :

3m subs : $144m/y *

5m subs : $480m/y *

10m subs : $920m/y *

With $20 per user which is the high target of David Gandler CEO of FuboTV :

3m subs : $288m/y profit

5m subs : $720m/y

10m subs : $1.4b/y

These calculations don’t account for Gambling revenue at all. FuboTV didn’t reveal enough data yet to calculate it.

Now let’s just consider that we reach the target of $16 only, without gambling because it didn’t work out as expected to have some conservative estimates.

Let’s calculate the P/E for $16 ad revenue per user for FuboTV.

5m subs : P/E 12 = $5.76b market cap (500% upside).

P/E 24 = $11.52b market cap (1000% upside).

P/E 36 = $17.28b market cap (1500% upside).

FuboTV is also a potential take over target for giant companies like Amazon and Apple that are trying to grow their online streaming offers like Amazon Prime Video and Apple TV. FuboTV has locked in rights for some NFL matches until 2030. FuboTV has been the fastest growing streaming company in 2021 while YoutubeTV and Hulu lagged behind in terms of new subscribers.

FuboTV’s CEO said previously that his ad system was not yet performing at maximum capacity as they were still developing a new bid system, once finished the ad revenue is expected to increase.

FuboTV’s has acquired Molotov, a french startup for their dev team as they were unable to find engineers in the USA, in France engineers are twice as cheap and just as good as American engineers. FuboTV has now a technological advantage. They also acquired Edisn, an AI company to be able to recognize in real time what is happening on the TV. This technology alone is a game changer for interactive television.

FuboTV has been acquiring gambling licenses all over the US and are expecting to launch the sportsbook in several new states.

The first state which is Iowa has been profitable since day one. It’s a very small state but YTD FuboTV has been quite profitable with a 10% net profit from bets.

You can check everything here, open the PDF and search for FuboTV (Source : https://irgc.iowa.gov/sports-wagering-revenue)

The second state is Arizona, FuboTV has also been profitable since day one in that state (Source : https://gaming.az.gov/sites/default/files/EW%20Revenue%20Report%20for%20Website%20-%20Jan%202022%20%282%29.pdf)

As a bonus, the estimated power saving from cutting the cord is between $8 to $30 per household per month. By using FuboTV not only customers will have a lower subscription cost but will also lower their electric bill. FuboTV can be considered as a green company.

Bear thesis :

Bears believe FuboTV can’t be profitable because until today they had negative margins, they didn’t take into account the recent price increase from $64.99 to $69.99 and the growing ad revenue per user. Once you take into account everything you start to realize that FuboTV can be very profitable. Keep in mind, all of these calculations are without gambling revenue because I’m not here to sell you a dream to try to make a buck but to give you a realist view of what is going on at FuboTV.

Bears also keep saying that the CEO has sold shares, yes he did sell some shares because his salary is quite small and he was all in on FuboTV. The CEO still hold 1,569,819 shares.

Bears recently said that the cofounder sold shares, which is not exact at 100%. The cofounder has received RSUs and RSUs are taxed as capital gains, he sold shares to cover the tax bill, this is a practice that makes sense because otherwise you owe the taxes even if the stock drops in the future.

Disclaimer : Also please note that I’m not a financial advisor nor a professional trader and anything you read here must be doubled checked by yourself or your financial advisor before entering any trade. Numbers on this post may be wrong as I may have miscalculated them and it’s your duty to double check everything.

Disclaimer : I’m long FUBO shares and CFDs. I don’t intend to buy nor sell shares in the coming days or weeks.

Submitted April 05, 2022 at 08:50PM by SimianZero
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