Fubo faces fierce competition from Warner/Disney/Fox, Roth says

Plans in the works from major sports broadcasters spells trouble for Fubo (Fubo Stock Quote, Chart, News, Analysts, Financials NYSE:FUBO) says Roth MKM analyst Darren Aftahi.

As reported today, Disney’s ESPN will team with Fox and Warner Brothers Discovery to launch a new sports streaming service.

The analyst says this is clearly bad news for Fubo.

“In a joint PR from some of the largest sports broadcasters, Warner Bros. Discovery (WBD-NC), ESPN/Disney (DIS-NC), and Fox Sports (FOX-NC) have agreed to launch a new sports streaming standalone app,” the analyst noted. “The three companies would each share one-third ownership of the apps. The release points to a potential launch as early as Fall 2024 (likely ahead of the kickoff of College and NFL football). We believe this could spell trouble for FUBO’s competitive advantage as a sports-first and focused streaming app that has been able to get away with recent price hikes due to limited competition elsewhere with a more holistic sports offering besides one-off sports channel subscriptions. If combined, the three companies could feature rights across ESPN, ABC, FOX, Fox Sports, TNT (notably absent from FUBO), TBS, and truTV. It’s also believed the new service would air games across multiple professional sports leagues and Disney Plus, Hulu, and Max users would receive the option to bundle the standalone sports streaming app onto their existing entertainment subscriptions.”

In a research update to clients February 7, Aftahi maintained his “Neutral” rating but lowered his price target on FUBO from $3.25 to $2.00.

The analyst thinks Fubo will post and EPS loss of $0.87 on revenue of $1.55-billion in fiscal 2024. He expects those numbers will improve to and EPS loss of $0.47 on a topline of $1.75-billion in fiscal 2025.

“Collectively, we believe the competitive landscape has increased, which in our view could lead to incremental churn and inhibit FUBO’s ability to initiate additional pricing increases, longer-term,” the analyst concluded. “Additionally, FUBO’s model remains too variable in nature to pull back on marketing (subscriber acquisition costs) and in our opinion, still reach its profitability timeline goals, especially in the face of additional competition competing for subscribers.”