Formula Done? Kicking the Tires on FuboTV's Drive to Survive Until 2025
Coming off a Q4 of subscriber and revenue growth, FuboTV says it'll be cash-flow positive in two years. But how much longer can the vMVPD keep burning through its own devalued stock?
In terms of subscriber growth, FuboTV just had the best fourth quarter in the transparent pay TV universe, adding 214,000 paying customers in the three-month period, despite initiating another price increase, to reach a base of 1.445 million subs.
Now the 11th largest pay TV operator in America, the virtual MVPD surpassed $1 billion in revenue last year for the first time, as its nascent ad sales stream grew by 30%. Net losses remained at an all-time high at nearly $153 million, but more than a third of that red ink came from discontinuing operations, such as fuboTV's abandoned sports-betting gambit.
But Wall Street has turned on this particular live streaming video company.
As of Wednesday afternoon trading, FuboTV shares are down nearly 22% compared to when the bell rang on Monday morning, and the company delivered its Q4 earnings report. Now priced at just around $1.86 a share as of this non-ChatGPT-enabled sentence-typing, FuboTV stock is only valued at a small fraction of its January 2021 peak of $42.21 a share.
And for FuboTV, which sold 37.1 million of its own devalued shares at market close last Friday to multiple investors at negotiated discount rates to raise $68.1 million in proceeds. that's a problem
"This helps fortify our balance sheet and advances us on our path to achieving our positive free cash flow target in 2025. More importantly, we believe this financing demonstrates our continued ability to access capital as needed," FuboTV CEO David Gandler told equity analysts during Monday's earnings call.
Perhaps channeling former Indianapolis Colts Coach Jim Mora (opens in new tab), said equity analysts could be heard, even on mute, screaming, "2025!?"
With fuboTV's Nasdaq trajectory almost perpetually nose-down these days, how much longer can it keep burning through its own declining stock to keep going?
Tweeted (opens in new tab) LightShed Partners analyst Rich Greenfield: "Love how management is talking about how well positioned they are and the company's great future -- while they are selling stock in a distressed situation for sub $2/share to stay afloat with an unprofitable biz model."
Of course, if FuboTV can keep growing subscribers and revenue, while reducing its quarterly losses, everything should be just fine.
But what are the odds of that all happening?
To be certain, the already challenging vMVPD market ain't going to get easier in the next 24 months.
Take the current concerning effort by the major station groups to force FuboTV to negotiate with it directly for local CBS affiliates instead of the network.
On Tuesday, Nexstar Media Group said it wouldn't accept anything below linear pay TV market retrans rates for a collection of its CBS local affiliates that are currently blacked out on FuboTV, regardless as to whether the operator is a cable giant, a satellite TV company ... or an upstart streaming company.
Like all live-streamed pay TV operators, FuboTV negotiates directly with broadcast networks, and it has worked around the affiliate problem by streaming Paramount Global's national CBS feed in the affected markets.
But Nexstar is asking CBS to let it negotiate directly with vMVPDs like FuboTV. Last week, Sinclair Broadcast Group, which also has CBS affiliates blacked out on FuboTV, said it feels the same way Nexstar does.
If Nexstar and Sinclair succeed, can FuboTV afford to stay in the pricey game of paying market rates for broadcast affiliates like CBS? Billing itself to consumers as the vMVPD to watch live sports, could it afford not to provide access to the business end of, say, March Madness, a pivotal CBS programming rights asset?
So, yeah, 2025 ... so close, yet so far away.
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!