fuboTV(NYSE: FUBO) shares popped 22.5% higher last month, according to data from S&P Global Market Intelligence. The streaming TV channel, which focuses on serving sports fans, made a deal with another regional sports network and The Athletic, a premium sports news outlet. The stock is still down 54% year to date (YTD), and down 98% from all-time highs due to heavy cash burn and major share dilution.
Here's why fuboTV stock shot up higher last month.
More regional sports
On Oct. 25, fuboTV announced it had made a broadcasting deal with the Chicago Sports Network, a local provider in the greater Chicago area that carries the Chicago Bulls, Chicago White Sox, and Chicago Blackhawks games. The deal was made right in time for the hockey and basketball seasons, meaning it could entice some fans in the area to cut the cord and join fuboTV for streaming games. The greater Chicago area has a population of just under 10 million people, which could present a big market opportunity for fuboTV. The company has only 1.6 million total subscribers as of the end of the third quarter.
On top of this announcement, fuboTV launched a partnership with The Athletic, a premium outlet for sports news. This partnership will put some of The Athletic's content on fuboTV and provide cross-marketing potential. Lastly, fuboTV launched more tiers to its streaming bundle, allowing people to individually subscribe to Paramount+, NBA League Pass, and The FanDuel Sports Network without paying for its costly virtual cable bundle.
With a focus on sports content, some investors are bullish on fuboTV as a beneficiary of the transition from traditional cable to streaming TV. However, its stock has not performed well over the long term and is down 98% from all-time highs, meaning if you'd bought $100 worth of stock at the peak, you would have just $2 in value left today.
Increasing revenue, still unprofitable
fuboTV's stock has been in the dumps because of its mounting losses. Revenue has grown 139% in the last three years, but it has never generated positive free cash flow. Over the last 12 months, it has burned around $150 million in cash, and it only has $146 million in cash on the balance sheet.
The company has been highly dilutive to shareholders by increasing its shares outstanding. Total shares outstanding are up 114% in the last three years alone, which is not a sustainable trajectory for the business.
Add it all together, and it doesn't matter that fuboTV added another large regional sports network to its platform. It has a shaky business model and is burning cash. Stay far away from this stock for the time being.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends fuboTV. The Motley Fool has a disclosure policy.
