- Analysts remained concerned over fuboTV Inc (NYSE:FUBO), as reflected by their re-rating post Q1 results.
- Needham analyst Laura Martin maintained FuboTV with a Buy and lowered the price target from $15 to $5 (49% upside).
- Gross margins of negative (2)% were the lowest FUBO had reported since 2Q20 when it only had 286,000 paid subscribers.
- The margin pressure came from new soccer content, standard price escalators on Jan 1, and FUBO's price increase didn't occur until 2Q22.
- Martin still believes that content deals will be renewed at lower prices per sub now that FUBO has over 1 million paid subscribers.
- Martin expects margin expansion to take longer than anticipated since FUBO's content deals were typically three years long.
- Roth Capital analyst Darren Aftahi downgraded FuboTV to Neutral from Buy with a price target of $4.25, down from $7.50 (26.7% upside).
- The cost of the company's subscriber base is yet to be offset by better advertising.
- FuboTV's advertising revenue came in 19% lower. While some of those headwinds were macro-related and a delay in its new ad tech stack, it marked the second quarter of ad average revenue per user compression.
- JPMorgan analyst Philip Cusick also downgraded FuboTV to Underweight from Neutral without a price target.
- Price Action: FUBO shares traded lower by 17.6% at $3.40 on the last check Friday.
