Is Fubo Stock Finally Ready to Win the Investing Game?

FuboTV (NYSE: FUBO) has always faced an uphill battle, even if its stock chart has been largely downhill. The company behind the namesake live TV streaming service is one of this year's biggest losers, down a blistering 68% so far this year. Fubo stock has coughed up 98.7% of its value since peaking during the 2020 holiday season.

Are you still with me? It's not a pretty story, but at least one Wall Street pro sees an opportunity at this low point. Drew Crum, a managing director at B. Riley, is initiating coverage of FuboTV with a buy rating. The shares would have to nearly double to reach his $18 price target.

This comes as little consolation to investors who bought at the peak. They would still be down 97.6% from that all-time high. However, it presents an interesting but risky opportunity for new shareholders. Is it worth the gamble for a company that failed at its once-lofty gambling ambitions? Can it be a fairy tale finish for a company that has continued to plummet despite a head-turning partnership with Walt Disney announced 14 months ago? Let's take a closer look at the hand that Fubo is holding.

Image source: Getty Images.

The agony of defeat

There are hundreds of streaming services out there, but only a handful have decided to take on the live TV market. It's not easy to duplicate the satellite or cable TV experience. You need to strike deals with all, or at least most, of the popular media networks and channels available on linear TV. Margins can be brutal, and unlike in the traditional satellite or cable market, retention is challenging when switching costs are nonexistent and new-trial promotions are plentiful.

Fubo entered the market with a hook shot. It emphasized sports, striking deals with obscure and not-so-obscure global sporting outlets. It also carries most of the channels you can still get from your old cable TV provider. The rub is that while the competition was limited, it was dominated by two titans. Alphabet's YouTube TV is the leader in this space. Not to be confused with the free, ubiquitous YouTube, the live TV offering only has roughly 10 million subscribers nationwide.

The other major competitor was -- past tense -- Disney, with its Hulu + Live TV platform. Again, not to be confused with the more popular Hulu service, this service had 4.4 million subscribers by the end of Disney's fiscal fourth quarter that ended in September. That is the last time that Disney will report that figure, because it struck a deal with Fubo in early 2025 to combine Hulu + Live TV with Fubo. No, the company is not called Hulu + Live TV + Fubo.

Fubo -- with 1.63 million paid subscribers at the end of September -- closed on its combination with Disney a month later. Disney has a controlling stake in the business with a roughly 70% position. However, it operates under the Fubo name and management.

The thrill of victory

The rare bullish analyst move on Fubo this week by B. Riley is worth exploring. Crum points out the stock is down 80% since peaking in January of last year after the partnership with Disney was announced. His conclusion is that the shares are oversold.

A humbling 1-for-12 reverse split completed earlier this week to keep the company in exchange compliance isn't comforting. There aren't many stocks that go on to succeed after going that route. However, the combination with Disney's seemingly disposable business does make Fubo the largest player in this space outside of YouTube TV.

Fubo tried in the past to differentiate its product. The sports angle seemed interesting, until you realize that it was competing with Disney-owned ESPN. It was able to get Baker Mayfield and other star athletes to create spots pitching Hulu + Live TV as a hotbed for athletic endeavors. Alphabet is one of the wealthiest companies in the planet, and struck a deal two NFL seasons ago for the NFL Sunday Ticket sports package. Fubo also tried to take advantage of its sports-centric audience by dipping its toes into gambling, but it soon learned that it takes a lot of money to clear those regulatory hurdles. Fubo was never going to win against sports betting stocks. It eventually bowed out on that dream.

Today's Fubo isn't perfect. The 6.2 million subscribers it was serving in its latest quarter -- with the two services combined -- is just below the 6.3 million accounts it was streaming to a year earlier. Profitability has been another problem, but a couple of analysts see Fubo reporting positive net income by next year.

This will probably always be a thin-margin segment of streaming service stocks. Even if Disney was just looking for a way to get Hulu + Live TV off the books for its now profitable streaming business, it now has the backing of one of the largest media stocks. Fubo recently announced a reseller and marketing arrangement with Disney's ESPN to expand the reach of the live TV service.

Fubo remains the underdog. It remains what the sporting world would call a Cinderella story waiting to happen. It's just a coincidence that Fubo's controlling stakeholder just happens to be the media giant that put Cinderella on the map. Can this pumpkin become a magical carriage with carriage rights? At today's prices, the upside is high even if it becomes something far less magical.

Rick Munarriz has positions in Alphabet and Walt Disney. The Motley Fool has positions in and recommends Alphabet and Walt Disney. The Motley Fool has a disclosure policy.