On exceptionally heavy trading of nearly 43 million shares, publicly traded sports-first vMVPD Fubo TV saw its stock price drop by 14% on Monday, ending the day at $2 per share.
The reason for the dip? Investors reacted negatively to an arguably conservative subscriber outlook in addition to what MarketWatch calls a “deep discount” share sale disclosure from the company that sees former analyst John Janedis in the C-Suite as its CFO.
It is the revelation that Fubo TV sold shares at “negotiated discounts” that likely triggered the sell-off, infuriating investors more than the “conservative” subscriber guidance linked to recently implemented subscription rate increases.
According to a SEC filing made today (2/27), the company sold approximately 36.7 million shares of its common stock for $68.1 million. It did so in block trades to multiple investors under Fubo TV’s at-the-market program. “The shares were sold at negotiated discounts to the closing sale price of the common stock on the New York Stock Exchange on February 24, 2023,” Fubo TV said.
This news definitively negated an 8.1% pre-market increase in Fubo TV’s share price driven by a good fourth quarter, which exceeded expectations. However, the Q1 2023 subscriber guidance was lackluster. And, Q4 2022 still saw Fubo TV see a net loss ($0.48 per share), even though the Zacks Consensus Estimate was for negative EPS of $0.76.
On its earnings call for analysts and investors, Fubo TV CEO and co-founder David Gandler began the discussion by commenting on U.S. rate increases of $5 by saying, “The price up and its timing, coupled with the World Cup cohort and typical Q1 seasonality is why we are delivering a conservative sub guide. That being said, we are still very excited about our growth prospects in 2023 and beyond.”
Later, in response to a question from Shweta Khajuria from Evercore ISI, he added, “The guidance that we provided was relatively conservative just because of the price up.”
Janedis shared that within the fourth quarter, North America subscription revenue was $278 million, representing 36% growth year-over-year. This was driven by subscriber growth as well as total ARPU, which was $72.50, representing 4% growth year-over-year. In the fourth quarter, North America advertising revenue was $33.6 million, representing 30% growth year-over-year. “We added a record number of new advertisers completely sold out our World Cup ad inventory and had a record-breaking political season,” he said. “This reflects our efforts and success to continue to expand our relationships with our largest advertisers.”
He then added that North America Q1 guidance calls for subscriber revenue of $1.140 million to $1.160 million and net revenue of $295 million to $300 million. “The Q1 subscriber guidance represents 9% growth year-over-year at the midpoint, the revenue guidance represents 26% growth year-over-year at the midpoint,” Janedis said. “This reflects our emphasis on ARPU expansion and strengthened unit economics with revenue growing at roughly 3x forecasted subscriber growth.”
