In This Article:
In early January, FuboTV's (NYSE: FUBO) story dramatically changed when it agreed to merge its business with Hulu. FuboTV's stock rose sharply as investors applauded the deal it made with media giant Disney (NYSE: DIS). Should you buy, sell, or hold FuboTV stock in 2025 before the transaction is completed?
Buy FuboTV
The reason to buy FuboTV is because you believe the hype around the business combination that has been proposed. There are a lot of benefits that will come along with the deal. For example, FuboTV's subscriber base will jump from around 1.7 million subscribers at the end of 2024 to as many as 6.2 million once it has taken on the much larger Hulu business.
But that's just one of the benefits. In addition to that, FuboTV will receive a cash infusion from Disney and other Hulu partners to the tune of $220 million. That will help with the integration of the two businesses and allow FuboTV to buy content. Then, there are the synergies that could arise, including FuboTV's ability to provide more diverse content offerings to subscribers. Effectively, it will jump into the big leagues of the streaming industry.
If you believe that this business combination will set the company up for future success, you might want to buy it in 2025 before the deal is finalized.
Hold FuboTV
The reason to hold FuboTV is basically the same reason you might want to buy it. In fact, it seems like it would be an odd decision to sell it now if you owned it in the belief that it would, someday, become a material competitor in the streaming space. Indeed, that day could be here, assuming the deal is consummate as expected.
That said, if the deal doesn't get consummated, the stock will probably fall. But FuboTV won't walk away empty-handed. There is a $130 million termination fee payable to FuboTV built into the transaction. So, FuboTV would be the same company it is today if the Hulu deal falls apart, only with the addition of an extra $130 million. You would basically own a better-positioned company in what many would consider a worst-case scenario for this transaction.
Sell FuboTV
There are a lot of reasons to like the FuboTV/Hulu tie-up. But there are some reasons to be worried, though they are a bit nuanced. After the transaction is complete, Disney will control 70% of FuboTV's shares and have effective control of the board of directors, which will be majority-appointed by Disney. There is a very real risk that FuboTV is run for the benefit of Disney, its largest shareholder, and not for all of the other investors that are just tagging along for the ride.