Sports streaming platform company FuboTV Inc FUBO shared a company update Monday that could change how it is positioning itself moving forward. Here’s what the company said and what could be ahead for shareholders.
What Happened: Shares of FuboTV rose sharply Monday after the company reported preliminary third-quarter results.
The company said third-quarter revenue for North American streaming is expected to be $210 million, ahead of a previously guided range of $200 million to $205 million. The company also said the Rest of World streaming revenue is expected to be $5.5 million or higher, in line with a previous guidance target of $5 million to $6 million.
FuboTV said paid subscribers in North America in the third quarter are expected to be 1.22 million, up 27% year-over-year. The figure comes in ahead of previous guidance of 1.135 million to 1.155 million. Rest of World paid subscribers are expected to hit 350,000 for the third quarter, in the middle of company guidance of 340,000 to 360,000.
“FuboTV’s strong preliminary third quarter 2022 results reflect meaningful advancements against our continued mission to profitably scale a leading global live TV streaming platform differentiated to the greatest breadth of premium content and interactivity,” FuboTV CEO and co-founder David Gandler said.
Fubo also announced it will be closing its Fubo Gaming and Fubo Sportsbook subsidiaries.
“Following our previously announced strategic review, we have concluded that continuing with Fubo Gaming and Fubo Sportsbook in this challenging macroeconomic environment would impact our ability to reach our longer-term profitability goals. Therefore we have made the difficult decision to exit the online sports wagering business effective immediately.”
Why It’s Important: The exit of the sportsbook by FuboTV could come as a bit of a surprise. The company has put a large focus on potential growth and reaching new audiences using this business line.
“We look forward to providing more color, as well as discussing our full third quarter 2022 results and full-year outlook, on our Nov. 4 earnings call,” Gandler said.
As news of Fubo exiting the sportsbook came out, some users reported problems with being able to withdraw money from the app. A report from Action Network said users couldn’t get money out the Fubo Sportsbook app.
“Effective immediately, Fubo Sportsbook is no longer taking bets. We are working with necessary parties to make sure players and their existing accounts will be appropriately handled,” FuboTV Senior Vice President of Communications Jennifer Press told Action Network.
The Fubo Sportsbook was live in Iowa, Arizona and New Jersey. Plans also called for the app to go live in Ohio next year with a partnership with NBA team Cleveland Cavaliers.
Fubo acquired Vigtory, a sports betting infrastructure company, which it reportedly couldn’t find a new buyer. The company also had pending licensing in several states.
The sports betting market continues to grow as more states legalize it and more sports leagues and media partners become more friendly to openly discuss the concept.
While there are huge revenue potentials for sports betting, the market is also highly saturated and highly promotional, leading to losses for companies in the sector in many cases. Companies such as DraftKings Inc DKNG and others spend hundreds of millions to acquire customers and entice them with promotional offers. Only FanDuel, owned by Flutter Entertainment PDYPY has shown a pattern of profitability for its U.S. sports betting division.
The exit might be bad in the short term with a loss taken on leaving the business. Given the sector and competitive nature, FuboTV could be doing the right thing and focusing on what it does best: streaming sports.
FuboTV could also look to partner with a sports betting company to generate revenue from the growth of the segment without taking on the financial risk.
FUBO Price Action: FuboTV shares are down 7.65% to $3.80 on Wednesday at publication versus a 52-week range of $2.32 to $35.10.
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