To The Moon

$fuboTV Inc.(FUBO)$

FuboTV's stock has plummeted over 99.99% from its all-time highs, but does that make it a buy now? Is the valuation discounted enough to warrant purchasing this stock? I’ll address these questions in this article. For context, I’ve rated FuboTV as a sell for over three years. If you followed that recommendation, you would have avoided this disastrous decline. But for 2025, I’m revisiting the company to evaluate whether it has moved out of the “sell” category and into a higher rating.

FuboTV was among the worst-performing stocks of 2024, even as the broader market, represented by the S&P 500 Index, rose over 20% during the year. Looking further back, FuboTV’s stock has declined by more than 95% from its all-time highs. This sharp drop has led some investors to question whether now might be the right time to buy the stock or if it is currently undervalued. In this video, I’ll address one of these questions by conducting a discounted cash flow (DCF) valuation to estimate the intrinsic value per share of this volatile, sports-focused streaming service. Let’s dive in.

To estimate FuboTV's price, I need several key inputs for my DCF model. These include:

• Market capitalization: $469 million (up over 10% today)

• Cash and equivalents: $146 million

• Long-term debt: $341 million

• Average diluted shares outstanding: 331 million

It’s worth noting that FuboTV has been aggressively diluting shareholders in recent years, issuing more shares to fund significant bottom-line losses. The company’s beta, a measure of its stock’s risk relative to the market, stands at 1.79 . This indicates FuboTV’s share price is 77% more volatile than the S&P 500. For example, if the index rises by 1%, FuboTV's stock tends to rise by 1.77%—and similarly, it falls 1.77% for every 1% decline in the index. Given the company’s operational challenges and highly competitive landscape, I believe this beta may understate its actual risk.

Industry Tailwinds and FuboTV’s Position

FuboTV offers a sports-focused streaming TV bundle, and the streaming industry overall is benefiting from strong tailwinds. Streaming is more convenient than traditional cable or satellite connections, often costs less, and is easier to set up. While FuboTV has grown in this environment, reaching $1.6 billion in trailing 12-month revenue (up from $200 million in 2020), challenges remain. Revenue growth has slowed as FuboTV raised prices, and the company faces stiff competition from better-priced alternatives like Hulu + Live TV and YouTube TV.

For sports-centric viewers, FuboTV may offer value because a larger portion of its channel lineup is dedicated to sports. However, the company’s bottom line tells a different story. Operating margins, while improving, remain deeply negative at -45%, an improvement from -50% in early 2022. The company has taken steps to cut costs, such as abandoning its sports gambling ambitions in favor of focusing on its core streaming business. Price increases have also helped reduce losses.

Challenges and Competitive Pressures

Despite these improvements, FuboTV’s challenges are significant. The company relies heavily on licensing sports content from providers like Disney (owner of ESPN), which puts it in a weak negotiating position. Unlike companies that create enduring content, such as movies or series, FuboTV’s sports content is perishable—demand for a game typically ends shortly after it airs. This limits the long-term value of FuboTV’s investments in content.

Additionally, FuboTV lacks the scale advantages enjoyed by competitors like Netflix. Its smaller size and reliance on third-party content providers make it difficult to achieve sustainable profitability. Disney, for example, could easily refuse to license ESPN content to FuboTV, redirecting customers to its own streaming services like Hulu + Live TV and ESPN+.

Free Cash Flow

One challenge in valuing FuboTV is the limited availability of analyst projections for its free cash flow (FCF). Currently, only one analyst provides forecasts, which are notably bullish. This analyst predicts that FuboTV will turn free cash flow positive in 2025, with rapid growth thereafter:

• $130 million in 2026

• $290 million in 2027

• $430 million in 2028

I find these estimates overly optimistic, given FuboTV’s lack of historical profitability and the structural challenges in its business model. FuboTV operates as a sports-centric streaming platform, bundling live TV channels at a subscription cost of $80–$100 per month. However, high content licensing fees—particularly to major partners like Disney and ESPN—make profitability elusive. Compounding the issue, Disney, which owns ESPN, also operates a competing service, Hulu + Live TV. It’s unlikely that Disney would offer FuboTV favorable terms that undercut its own streaming offerings.

Valuation

To account for these concerns, I’ve adjusted the analyst's projections downward. My revised FCF estimates assume slower growth, reaching $60 million by 2028—still a significant improvement but far less aggressive than the original forecast.

DCF Valuation Assumptions

• Discount rate (WACC): 13.91%Cost of equity: 15%Cost of debt: 13.5%

• Capital structure: 75% debt, 25% equity

• Terminal growth rate: 5%

Using these inputs, I estimate the following:

• Value of operations: $692 million

• Equity value (after adjustments): $500 million

• Intrinsic value per share: $1.50

With FuboTV's current share price around $3.3, my analysis suggests it is over valued, if the stock still trade at $1.30 it will be fairly value, I typically apply a 10% margin of safety. This close alignment between market price and intrinsic value indicates significant mispricing under my assumptions.

Conclusion

In conclusion, while FuboTV's stock appears fairly valued based on this DCF model, its high-risk profile and uncertain path to profitability warrant caution. The company's ability to execute its business strategy and manage competition will be critical to its future success. Let me know if you agree with these adjustments or believe my outlook is too conservative.

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