FuboTV Stock Dives Despite Launch of Live Sports Betting Feature

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The live sports video streaming platform FuboTV just launched a new feature that will allow subscribers to bet on the outcome of their favorite events by using the company’s TV or mobile platform.

According to the official press release, “Pick’ems” will be launched next Sunday and it will be progressively made available to all FuboTV subscribers over the coming months.

Pick’ems is a free-to-play contest that allows users to compete with friends and relatives and make their way into the leaderboard. However, users in select markets will also be able to scan a QR code to place real-money bets based on their picks. Fubo Sportsbook is currently available only in Arizona and Iowa for now.

The free contest is not yet being rewarded but FuboTV plans to introduce prizes in the future to encourage users to give the feature a try.

This marks the latest step from the New York-based sports streaming platform to seamlessly integrate the services of Fubo Sportsbook into its ecosystem as part of its effort to further diversify its revenue streams.

“With this weekend’s launch, FuboTV will become the first live TV streaming platform to offer pick’em games integrated into the video experience with a direct gateway to an owned-and-operated sportsbook”, stated FuboTV’s Chief Product Officer Mike Berkley.

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FuboTV Stock Trades Lower Despite the Good News

FuboTV (FUBO) price chart – Source: TradingView

Despite this positive announcement, FuboTV stock is down 8% today at $2.57 per share as market participants appear to be reacting negatively to the Federal Reserve’s decision to increase its benchmark interest rate by 75 basis points.

Since the year started, this tech stock is accumulating losses of 83.4% while the price is standing 93.7% below its 52-week high of $35.1 per share.

The consensus recommendation for FuboTV as per data compiled by MarketBeat is hold with a total of 5 out of 8 analysts currently rating the stock as such. The average price target for FUBO currently stands at $14 per share resulting in a 450% upside potential if that target is hit. Meanwhile, the highest estimate for FuboTV stock from analysts is standing at $32 and the lowest at $4.25 per share.

Last month, analyst Phillip Cusick from JP Morgan downgraded FuboTV stock from neutral to sell after citing “an increasingly challenging streaming environment”. Moreover, the analyst questioned Fubo’s “long-term business model and path to profitability”.

Does FuboTV Have Enough Cash to Survive in the Current Environment?

FuboTV reported total cash and equivalents of $450.92 million by the end of March 2022. During that same period, the company reported net operating cash flows of minus $126.58 million but reported negligible capital expenditures.

On a year-on-year basis, the company managed to keep its cash reserves at similar levels – at over $450 million – by issuing common stock via at-the-market offerings.

At current prices, for FuboTV to raise $100 million it would have to sell nearly 40 million shares. This is roughly a quarter of the reported weighted average shares outstanding as per this report.

Based on its current quarterly cash burn, the company will be forced to find additional funds two quarters from now to remain afloat. If the company opts to keep raising capital via at-the-market offerings, existing shareholders will continue to be diluted unless they keep buying a number of shares corresponding to their current percentage of ownership over the company.

The environment does seem challenging for the sports streaming company as indicated by analysts and this explains why the stock has gone down so sharply since the year started.

The company’s Chief Executive Officer, David Gandler, tackled the issue during the conference call that came after the release of the firm’s latest quarterly report. According to Gandler, the company has enough “financial flexibility is expected to take us through 2023”.

Moreover, FuboTV’s top executive stated that they are targeting “positive cash flow and adjusted EBITDA in 2025 with a relatively modest cash requirement anticipated in 2024”.

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