Anticipated Outcome: This Stock Will Lead in Streaming Sector by 2025 (Spoiler Alert: It's Not Netflix)
Last year, 2024, saw the S&P 500 and Nasdaq Composite soaring by an impressive 23% and 29%, respectively. With such generous market conditions, it's challenging to lose money. However, if you invested in sports-centric streaming stock FuboTV (FUBO -1.36%) in January 2024, you'd have encountered a 60% drop by December. Not exactly the news investors want to hear. Adding to the disappointment, Netflix stock surged 83% in 2024, thanks to its new live sports broadcasting venture. This could make you question FuboTV's future in the streaming realm.
But hold on a minute! I'm still bullish on FuboTV. I believe this underdog streaming company could be the top performer in the sector for 2025. Here's why.
Netflix's Growth: Pros and Cons
2024 was a groundbreaking year for Netflix. The streaming giant added several critically acclaimed series and movies to its library, while its low-cost advertising tier gained traction with viewers. The company also showed promise in the sports broadcasting industry by presenting live events.
These accomplishments were met with enthusiasm from investors, driving Netflix's stock price up to record-breaking heights. However, there's a potential downside that investors should consider – when success is prolonged, investor expectations escalate. Should Netflix falter or fail to meet lofty Wall Street expectations, the stock might take a hit.
FuboTV's Turning Point
FuboTV, primarily focusing on live sports, has experienced substantial growth in its subscriber base but continues to operate at a loss. The competition is stiff, with tech giants Google (YouTube TV), Apple, and Amazon all vying for a piece of the sports broadcasting pie.
But FuboTV got a significant boost early in 2024 when media titan Disney stepped in with a little magic. Disney operates popular streaming platforms like Hulu and is home to various sports broadcast networks, such as ABC and ESPN. While Disney won't provide FuboTV direct access to Hulu's massive subscriber base, it plans to combine its Hulu + Live TV offering with FuboTV.
The merger aims to create a streaming entity boasting more than 6 million subscribers—almost quadruple FuboTV's current subscriber base. This deal is expected to make the combined company cash flow positive, offering a solid foundation for future growth.
Should You Invest in FuboTV Stock Now?
FuboTV's stock has surged more than 3x since hitting rock bottom last summer, with most of the gains happening in early January following the merger announcement with Hulu + Live TV. With so much momentum, you might think the gains are already priced into the stock. However, its current valuation could still be reasonable.
According to Reuters, the merged entity could generate up to $6 billion in revenue. Given FuboTV's current market capitalization of $1.3 billion, its price-to-sales (P/S) ratio is a modest 0.22. And with the deal set to make FuboTV profitable, new valuations will likely come into play.
While the deal comes with some execution risk, the overall outlook for FuboTV is positive. With its partnership with Disney, FuboTV can expand its content offerings, increase its revenue, and bolster its market presence. 2025 could be a pivotal year for the company, making now an opportune time to consider investing in FuboTV.
In the context of investing, considering FuboTV's strategic partnership with Disney and its potential to expand content offerings, increase revenue, and bolster market presence, 2025 could be an excellent year for seeking profits with this streaming company. Furthermore, with FuboTV's current P/S ratio of 0.22, its stock may still be relatively undervalued, providing potential for substantial returns if the company successfully executes its plans.
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