It's Time For FuboTV to Stand Out in the Sea of Streaming FuboTV is proving it can generate revenue. But for FUBO stock to grow the company has to show what, if anything, it does better than another streaming companies

The sports-forward service must show investors that it's plans to capture market share are working

One of the more intriguing of the meme stocks from 2021 was FuboTV (NYSE: FUBO). I say intriguing because unlike some of the companies that got caught up in the meme trade, Fubo was generating growing revenue. However, FUBO stock continues to have heavy short interest that continues to serve as a flashing red warning light for many investors.

The issue vexing investors is not what Fubo does. It's a streaming platform. It's more a question of what, if anything, does it do better than other streaming companies. As a response, Fubo would argue that it is the only sports-forward streaming service. And it has an integrated sportsbook that, in theory, will increase the company's average revenue per user (ARPU).

This is why I referred to FUBO stock as a sum-of-its-parts stock when I was Kate Stalter's guest on The MarketBeat Podcast. But I acknowledged then that the company had to show this model can work.

Based simply on revenue that may be the case. In the company's most recent quarter, Fubo cracked the one-million subscriber mark. That led to a 119% year-over-year growth in revenue. The company also added 185,000 net subscribers which was a 106% year-over-year increase. Furthermore, advertising revenue grew by 98% on a year-over-year basis. And at $25.9 million it accounted for 11% of total revenue.

No Profit in Sight

While FuboTV is growing revenue, earnings are another story. The company is not profitable and is not expected to show a profit for several years. By itself, that's neither unusual nor disqualifying for a relatively young company.

However, Fubo's business model requires that it purchase the rights to license its programming. This number isn't as large as Netflix (NASDAQ: NFLX) which is creating its own content. But it's a cost that will become more concerning if the customer cannot continue to grow revenue. And keep in mind that the company does not have the rights to broadcast Turner Sports at this time. That leaves it out of a significant amount of National Basketball Association (NBA) coverage.

Fubo is Also a Sportsbook

In addition to offering live sports, Fubo also has its own sportsbook, aptly named Fubo Sportsbook. This allows FuboTV customers to watch sports and bet on those sports within a single, self-contained system. That's a combination that is unique to FuboTV. And, in the interest of full disclosure, it's a reason I took a small (long) position in FUBO stock recently. As I see it, sports bettors are going to use multiple platforms. And if they're already paying for, and watching, FuboTV, it's logical that they'll use the Fubo Sportsbook for at least some of their activity.

However, the sportsbook angle will take time to grow. The company says it will probably not start generating significant revenue from this side of the business until 2023. As of the company's most recent earnings report it was only available in two states. However, Fubo also announced it had deals in place with 10 additional states which the company anticipates will allow the sportsbook to launch in additional markets. The potential growth of the sportsbook in monetizing the company's existing customer base will be critical to the company's plans.

FUBO Stock Will Require Patience

Short interest in FUBO stock remains high and that will continue to add volatility to the stock in the short term. The company is also set to deliver its next earnings report on May 5. Considering that report is coming in the day after the Federal Reserve's announcement on the Fed funds rate, anything short of a home run is likely to put pressure on the stock.

But if you take a small position and have the time to ride it out, FUBO stock looks intriguing. Not if you're waiting for it to soar to over $40 a share. But the consensus opinion of analysts is that this could be a $20 stock. And there are some who may believe that is too optimistic. However, is the stock really only half as valuable on a per share basis than it was before the pandemic? That seems unlikely. But it's up for the company to make that case.