10 Worst Communication Services Stocks to Buy According to Short Sellers

6) fuboTV Inc. (NYSE:FUBO)

Short % of Float (15 August 2024): 14.23%

Number of Hedge Fund Holders: 13

fuboTV Inc. (NYSE:FUBO) is an internet television service provider. It focuses mainly on channels that distribute live sports, plus news, network television series, and movies.

fuboTV Inc. (NYSE:FUBO) is exposed to numerous business risks, such as intense business competition and higher costs. Short sellers continue to bet against this stock as it’s a loss-making company. On $391 million in revenue in 2Q 2024, the company saw a net loss of $25.8 million and an adjusted EBITDA loss of $11.0 million. Also, it posted a free cash flow loss of $35.3 million. Apart from this concern, fuboTV Inc. (NYSE:FUBO) has minimal resources earmarked for marketing.

However, Wall Street analysts believe that the company’s stock is expected to move northwards moving forward. Media giants Disney, Fox, and Warner Brothers Discovery focused on launching a direct-to-consumer (DTC) sports streaming application named Venu. Recently, fuboTV Inc. (NYSE:FUBO) was given a preliminary injunction from the courts to cease the Venu application. While this is just an initial stoppage, it should help the company dodge some potential competitors for now.

Improvement in the margins supported in improving the company’s cash burn. At its lowest level, its FCF burn was $360 million a year. However, over the previous 12 months, this burn was less than $150 million. Therefore, fuboTV Inc. (NYSE:FUBO) appears to be in a much better spot than it was earlier.  Moreover, the company’s high-quality streaming technology and user interface should continue to help in improving its average revenue per user. Also, its strong partnerships with sports leagues and media companies are expected to drive growth. For example, in 2023, fuboTV Inc. (NYSE:FUBO) joined hands with ViacomCBS to cement its programming lineup and reach.

fuboTV Inc. (NYSE:FUBO) expects North American subscribers in 2024 to increase by 7% YoY at the midpoint. The number of subscribers is expected in the range of 1.725 million – 1.745 million. Also, the company repurchased $46.9 million of convertible debt. It issued stock to finance these repurchases. As a result of this move, it was able to reduce its debt, enhance shareholder value, and improve financial flexibility.

Analysts at Needham & Company LLC initiated a coverage on the shares of fuboTV Inc. (NYSE:FUBO), giving it a “Buy” rating and setting a price target of $2.00 on 19^th August. At the end of 2Q 2024, 13 hedge funds owned stakes in fuboTV Inc. (NYSE:FUBO), with total stakes amounting to $23.9 million.