FUBO Could Get the Squeeze
As shown by AMC and GameStop, bears have been getting shlonged. The idea behind taking a position in FUBO is quite simple: We're gonna squeeze shorts.
FuboTV is the leading sports-first live TV streaming platform offering subscribers access to tens of thousands of live sporting events, along with news and entertainment content.
Not only does this play fit the theme of short squeezing that has been going on, but this is also a technical and fundamentally sound trade (not a financial advisor by the way). FuboTV is now the second-most shorted name in the US, behind GameStop. S3 Managing Partner Ihor Dusaniwsky's short interest in FUBO stock is now $1.7 billion, or 67.08% of the float, a 27% increase in two days. I'm not saying it'll be the next Gamestop-like squeeze, but it has the potential to be epic.
Positive announcements in January have created optimism in investors. On January fifth, FuboTV announced preliminary fourth-quarter revenue and subscriber results today. Both metrics are expected to exceed previously issued guidance in a record quarter and year.
- Q4 total revenue is expected to be between $94-$98 million, a 77% to 84% increase year-over-year. Prior expectations were $80-$85 million.
- Paid subscribers at year-end are expected to exceed 545,000, in increase of more than 72% year-over-year. Before it was 500,000-510,000 subscribers.
- They will continue to be focused on executing their growth strategies, which include continuing to grow advertising revenues, working to implement sports wagering and further establishing FuboTV as a sports and live streaming service.
- The fastest growing live-streaming platform with a revenue growth rate of 84% and a SuperBowl catalyst. People are going to be watching that game on Fubo and they'll probably have a commercial on too.
- Closed an offering of $350m on January 16th, Disney owns 10% and there are Roku/Spotify investors on the Board of Directors.
The Shorting + Gambling Aspect
Retail has been going nuts over short squeeze plays. Gamestop, AMC, BlackBerry are all examples of high running stocks as of late. I'm personally looking forward to that to wind down a bit and have liquidity go towards other plays, like FUBO. On January 26th, the streaming sports service and aspiring sportsbook operator had the sixth-largest short percentage relative to its total float 54.46%. That was the equivalent of $1.21 billion, according to S3 data. The difference between Gamestop and FuboTV stands quite far apart, as one is a growing streaming company with the first and only service to provide quality in 4K, and the other was a reason to shove your foot up billionaires asses. Actually, maybe things aren't so different. We will do that too. Gamestop was/is dying, FuboTV is on the up and up.
A short-covering rally in fuboTV, assuming it happens, won't be a "stick it to the man" event. That’s because the streaming company is supported by some well-known pros, like Disney. David Einhorn recently revealed his Greenlight Capital was an early FuboTV investor, and he sees a bright future for the company where it can separate itself rather than directly compete, with traditional sportsbook operators. You can read more about its entry to gambling here.
The hedge fund manager's bullish sentiment revolves around FuboTV's sportsbook and form of high engagement via sports wagering. Einhorn envisions a future in which gamblers will be able to bet on specific outcomes within a game. The outcome I see is short sellers wetting their pants.
Say whether or not an NBA player will make a free throw, or an NFL kicker is about to kick a field goal. He argues that FuboTV is positioned to capitalize on that form of wagering, making the company more akin to the in-game purchasing model used by video game companies, not an old guard sportsbook
- FUBO is trying to retest their high of 62.29. The bullish volume on the bottom of the chart at time of writing is demonstrating a move in the right direction. You can wait to pick a comfortable entry on a dip, but do your own thang.
- The current green candle signals indecision, but more-so a battle between bulls and bears with bulls winning.
- Needs to surpass R1 (resistance 1) which is at $57. Then we can aim for $60 and beyond. Alternatively, the risk is around $40. It all depends on your own tolerance, though.
- Earnings in March send this. Shorts will be cleaning up their pants and covering. In this climate however, I wouldn't be surprised to see new highs soon. Again, I think the SuperBowl will be positive for the price.
Early footprints of ROKU are seen in FUBO's chart. During its beginning phase, shorts were all over it until the realization that streaming was actually the future. This pandemic has certainly helped pump up streaming numbers, and so my bet again is ON FUBO to stomp on shorts and put their bear thesis to rest.
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