There are only eight stocks with market caps north of $1 billion that have more than doubled this year. FuboTV(NYSE: FUBO) happens to be one of them. The provider of the namesake live TV service with enhanced coverage of sporting events shot higher in the first trading week of the year after striking a deal with Disney(NYSE: DIS). The family entertainment giant would contribute its larger Hulu + Live TV platform to the company in exchange for a 70% stake.
Fubo would also receive a $220 million cash settlement from Venu Sports, an ambitious partnership between ESPN parent Disney and two other media behemoths, to create a $43-a-month sports-centric streaming service. Fubo had secured a legal injunction blocking the launch of Venu on anticompetitive grounds, agreeing to pull its objection in exchange for the settlement.
A funny thing happened after that: Within days, Venu Sports came undone on its own. The three media mavens went their separate ways.
Where does this leave Fubo in the aftermath of the rubble? Is this a winning lottery ticket that scored a sizable cash haul for a threat that has now gone away, as well as gaining Disney as a majority stakeholder, or a dud that was given hush money and a streaming platform that wasn't a priority for the House of Mouse? Fubo will continue to be volatile in the next few years, but read on to see why I think it can double -- if not triple -- from where it is now in the next three years.
This game can go two ways
Let's size up Fubo as a stand-alone company first. After all, a lot can happen between now and when the deal with Disney is set to close in the first half of next year. Disney can walk. Regulators may block the partnership.
Fubo had just 1.7 million paid subscribers at the end of 2024. It's not a big number, but folks pay up for a live TV streaming service that duplicates cable or satellite television. Between the premiums paid and the ad revenue that Fubo collects, average revenue per user is currently $87.90 a month. The $1.6 billion in revenue it scored for all of last year is a 19% improvement over 2023.
Profitability has proven elusive, but Fubo's losses continue to contract. Its latest quarter is also the first time Fubo generated positive free cash flow.
Analysts see Fubo continuing to grow as a stand-alone company. They see revenue of $2.2 billion come 2027, a modest 35% increase in three years from where it is now. The news gets better on the bottom line. Analysts see Fubo turning profitable on an adjusted basis in 2026, hitting the mark on a reported basis a year later.
In short, today's view of Fubo in three years is a company firmly in the black, with compounded annual revenue growth between 10% and 11% in that time.
Then let's factor in two nine-figure sums. Will the Venu Sports partners try to fight the $220 million settlement they reached four days before the partnership itself fumbled at the goal line? It would be a contested legal battle that may tarnish the reputation of the Venu moguls.
With Disney a 70% stakeholder in Fubo if that deal goes through, it wouldn't put up much of a fight. And if the combination with Disney does fall apart between now and its projected closing 10 to 16 months from now, Fubo will receive a $130 million termination fee from Disney if the media giant or regulators kill the deal.
Fubo has a market cap of less than $1.1 billion and an enterprise value just shy of $1.3 billion. Adding $220 million, $130 million, or $350 million to Fubo's coffers would dramatically improve its enterprise value. Even if you disregard the capital infusion, Fubo is trading at a market cap that is 0.5 times the $2.2 billion in revenue it is projected to make in 2027 and a reasonable earnings multiple of 14 times its adjusted earnings target for that year. With the extra liquidity in its arsenal, Fubo would have the financial means to grow a lot faster and ramp up its offerings.
Image source: Getty Images.
Into the Mousetrap
Fubo has a shot to double, if not triple, in the next three years if the Disney deal falls through, but things will also work out nicely with Hulu + Live TV in its portfolio. Disney's live TV streaming platform has 4.6 million subscribers, and average monthly revenue per paid subscriber there is a heartier $99.22. Disney would be receiving 70% of the shares, but it's contributing 73% of the subscribers and more than 75% of the revenue.
Having Disney in Fubo's corner also gives it more marketing muscle. Whether Fubo remains a stand-alone service or if it becomes a sport-enhanced offering of Hulu + Live TV, it's going to benefit from Disney's global reach. It's not just about brand awareness. Disney's direct-to-consumer premium audience currently consists of 24.9 million at ESPN+, 49 million at Hulu, and 124.6 million at Disney+.
All this doesn't come for free. Disney's stake will balloon Fubo's market cap to more than $3.6 billion.
Disney's overall streaming business is now profitable, but that's not likely the case for its fledgling live TV platform. There will be synergies for the two services coming together, with a current combined audience of 6.3 million premium accounts. It may be harder to see the combined company tripling in market cap value to almost $11 billion, but growth could be stronger for the two players as the country's second-largest live TV platform behind Alphabet's YouTube TV.
Fubo on its own would be more speculative, but with a better chance to triple from here. Disney and Fubo together would be safer for investors, and a much stronger possibility to double than if it were just Fubo striking flying solo. Either way, the future is brighter now for Fubo.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Rick Munarriz has positions in Walt Disney and fuboTV. The Motley Fool has positions in and recommends Alphabet, Walt Disney, and fuboTV. The Motley Fool has a disclosure policy.
