Berenberg Clarifies Investor's Wagering Concerns with FuboTV (FUBO) Management
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Berenberg analyst David Beckel reiterated a Buy rating and $47.00 price target on fuboTV (NYSE: FUBO) while updating his deep dive on Fubo’s wagering business, that he ascribed $12/share of option value to. After publishing the analysis, he received constructive pushback from investors, mostly focused on 1) Fubo’s ability to compete (cost effectively) against wagering pure-plays like DraftKings and FanDuel and 2) its practical ability to offer an integrated wagering experience within its video platform.
Fubo plans to run a wagering business with healthy gross margin, not engage in a marketing and promotion arms race with DraftKings and FanDuel who both spend well over $1bn per year in marketing and promotions on the hope it will pay off as additional U.S. states legalize gambling and competitors run out of money.
Fubo’s wagering business is complementary to its broader sports media platform, expecting contribution to ARPU over time while serving as a lead-generation channel which lowers churn and improves engagement for the core video product.
Integration is possible. Many investors have questioned Fubo’s ability to incorporate a wagering
product “on top” of a linear TV feed but management believes that, as long as the feed itself is not
manipulated, Fubo can treat the content within its platform (e.g., with an L-bar). Management also believes that distribution platforms (i.e., Roku) will eventually relax restrictive anti-gambling provisions as legal online betting becomes more pervasive.
The analyst stated "Fubo’s wagering strategy is not without risk, but we caution investors against
dismissing it as a financially irresponsible means for legitimizing its vMVPD business. The media
ecosystem is extremely fluid, and the concept and form factor of content is constantly evolving.
We believe a digital platform focused on enhancing the value of sports content stands a good
chance of succeeding and deserves the benefit of bears’ doubts".
Shares of fuboTV closed at $39.59 yesterday.
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