DD on FuboTV
Please check these numbers that I've calculated after carefully studying the balance sheet and business model of FUBO. 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.
FUBO has now increased their base package from 64.99 to 69.99, if you check the financial statement of the company don't forget to account for $5 more per subscriber to calculate and reach the same numbers.
If FUBO 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 *
These calculations don't account for Gambling revenue at all. FUBO didn't reveal enough data yet to calculate it.
Ads revenue per user could possibly grow even more than $16, the CPM for TV ads has been growing every year. The current CPM at FUBO is $21, this has been disclosed in a TV interview. The current ad revenue per user per month is $8+.
Proof : https://www.emarketer.com/chart/230277/average-cpm-us-primetime-tv-upfront-ads-broadcast-vs-cable-2008-2020
With $20 per user which could be achieved by 2026 the numbers are looking even better for FUBO as :
3m subs : $288m/y profit
5m subs : $720m/y
10m subs : $1.4b/y
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 FUBO.
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).
FUBO 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. FUBO has locked in rights for some NFL matches until 2030. FUBO has been the fastest growing streaming company in 2021 while YoutubeTV and Hulu lagged behind in terms of new subscribers.
FUBO'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.
FUBO'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. FUBO 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.
FUBO 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 FUBO has been quite profitable with a 10% net profit from bets. You can check everything here, open the PDF and search for FUBO : https://irgc.iowa.gov/sports-wagering-revenue
FUBO also has a short interest close to 25% at the moment which could potentially squeeze the stock.
Bear thesis :
Bears believe FUBO 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 FUBO 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 FUBO.
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 FUBO. The CEO still hold 1,569,819 shares.
I've also posted part of this to Twitter, this is my original research.
Disclaimer : I'm long FUBO shares and CFDs. I don't intent to buy nor sell any FUBO shares in the next 14 days.
Submitted March 30, 2022 at 07:15AM by SimianZero
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