Wedbush Downgrades FuboTV, Citing 'Cash Burn,' Need for Capital

Wedbush Securities downgraded fuboTV to “neutral” from “outperform,” saying despite “bold targets,” the sports-leaning virtual MVPD “needs to raise capital and cut cash burn rapidly or it will be out of cash within a year.” Analyst Michael Pachter is "confident it can do both,” but it’s uncertain how dilutive the capital raise will be and how rapidly their cash burn will improve," he said in a Wednesday investor note. The analyst noted fuboTV’s “solid head start” in delivering live sports to its subscribers, its "thriving and growing" advertising business and “compelling opportunity for a sports wagering company to partner with an established sports television broadcaster,” but he expressed declining confidence over “slowing subscriber growth, fierce competition, inflation, and rising content costs.” At its Tuesday investor day, fuboTV said it intends to be free cash flow positive and achieve adjusted earnings before interest, depreciation and amortization of 15% in 2025, Pachter said. A primary concern is “slowing domestic subscriber growth,” he said, also noting escalating content costs.