Needham analyst Laura Martin saw fuboTV Inc FUBO as an inexpensive way for public investors to participate in the U.S. consumer shift toward OTT and Streaming TV.
Martin called FUBO a skinny bundle (also known as a virtual MVPD) that markets itself as a "sports-first" linear TV replacement.
FUBO offers over 100+ live linear TV channels representing about 80% (Martin's estimate) of an average large bundle's TV viewing hours, at $65/month if consumers commit to a 1-year plan.
Users can disconnect 97% of their FUBO subscription monthly without penalty.
While FUBO focused on growing its installed base of subscribers, Martin is most excited about high-margin add-on new revenue streams such as up-sells, advertising, wagering, and channel fees.
From a valuation perspective, FUBO is an inexpensive streaming service as per Martin because it trades at about 1/3 of Roku, Inc's ROKU multiple and a 35% discount to Netflix, Inc's NFLX multiple.
The upside is from wagering multiples, which are much higher than streaming, suggesting that FUBO is even more undervalued than that industry.
Martin maintained her 2Q22 estimates for revenue and Adj EBITDA Loss. She slightly shifted the 2Q revenue mix between subscription and advertising.
Martin cut her FY22 estimates for FUBO to reflect growing competition in the vMVPD space, slower streaming ad-rev growth, and weakening U.S. consumer spending owing to higher gasoline prices and other inflationary pressures on goods.
Martin shifted some of her sub-growth from FY22 into FY23, leading to higher revenue for FY23. She also projected higher costs in FY23 due to wagering.
Martin cut the price target on FUBO to $5 from $15 and maintained a Buy.
Price Action: FUBO shares traded lower by 3.75% at $2.57 on the last check Wednesday.
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