Why FuboTV Stock Crashed Today
Key Points
Combining with Disney's Hulu + Live TV service helped to boost Fubo's revenue.
Profits, however, may be harder to come by.
- 10 stocks we like better than FuboTV ›
Shares of FuboTV (NYSE: FUBO) sank 22% on Tuesday after the streaming company announced an unpopular plan to slash its share count.
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Integrating Hulu
Fubo's revenue climbed 40% year over year to $1.5 billion in its fiscal 2026 first quarter, which ended on Dec. 31. The sports streaming service struck a deal with Disney (NYSE: DIS) in October that integrated the entertainment giant's Hulu + Live TV service into Fubo's operations.
The combined business was projected to benefit from operational synergies such as content cost savings and advertising optimization initiatives. "Together with Disney, we're creating a more flexible streaming ecosystem that gives consumers greater choice, while driving profitability and sustainable growth," Fubo CEO David Gandler said when the deal closed on Oct. 29.
The profitability part of that plan, however, is going to take some time. Fubo reported a net loss of $19.1 million, though that was a significant improvement from a loss of $38.6 million in the prior-year quarter.
Going in reverse
Perhaps more concerning is Fubo's announcement that it intends to conduct a reverse stock split later this quarter.
Most splits are forward stock splits that result in investors having more shares after the split is completed. For example, for a shareholder who owns 10 shares of a stock trading at $20 per share, a 10-for-1 forward split would result in that investor having 100 shares valued at $2 per share.
A reverse stock split does the opposite. In that same example, a 1-for-10 reverse split would result in the investor having 1 share valued at $200.
As you can see, stock splits don't change the value of a business. They simply divide it into more (or fewer) pieces.
However, investors tend to prefer owning more shares of a company rather than less. That's one of the reasons why they weren't thrilled with Fubo's plans to enact a 1-for-8 or 1-for-12 reverse split (Fubo's board of directors has yet to decide the final ratio).
Moreover, traders know that forward splits tend to come after a business performs well both operationally and financially. Reverse splits, on the other hand, tend to come after a company has struggled and often portend further challenges and stock price declines.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool has a disclosure policy.
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