Shares of fuboTV (NYSE: FUBO) were taking a dive after initially popping early this morning as the sports-based streaming service responded poorly to news that Disney (NYSE: DIS) and Charter Communications (NASDAQ: CHTR) had resolved a dispute that started at the beginning of the month and had led to the removal of Disney’s channels from Charter’s Spectrum cable service.
The two sides reached an agreement ahead of the first Monday Night Football tonight.
As of 2:18 p.m. ET, fubo stock was down 15.1% after trading as high 10.9% this morning, shortly after the market open, seemingly on the belief that the blackout would persist through tonight’s game, driving viewers to fubo.
Fubo stock had been a beneficiary of the dispute, rising when it was first announced. The stock gained 13% on Sept. 1 and tacked on another 10% on Sept. 5 as the market opened after Labor Day weekend with Disney’s blackout still going.
Presumably, investors were betting that Spectrum customers unable to watch college football or the U.S. Open tennis tournament would turn to fubo to watch them, though there’s been no clear evidence that fubo experienced a spike due to the blackout, though it makes sense that the sports-streaming service would see some benefit.
Fubo is going to need more than a temporary ESPN blackout to fuel its recovery. The company remains unprofitable, posting a $30.5 million adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Free-cash-flow loss was $75.8 million; it doesn’t expect FCF positivity until 2025.
While its paid subscriber base is growing, competition in sports entertainment is heating up as tech giants take exclusive broadcast rights for their own platforms, a trend that could present further challenges to fubo going forward.
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Jeremy Bowman has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney and fuboTV. The Motley Fool has a disclosure policy.
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