Some stocks occasionally experience significant price drops due to shortsighted reasons. When that happens, it presents an excellent opportunity for careful and patient investors to buy the dip.
Other times, shares of companies move in the wrong direction for good reasons. In those cases, it is generally best to stay away unless there are good reasons to think the corporation in question can overcome whatever headwinds it is facing.
That brings leads to fuboTV (NYSE: FUBO) and Chegg (NYSE: CHGG), which have significantly lagged the market over the past two years. Both are now penny stocks, but even though they look cheap, these stocks aren’t worth investing in. Here is why.
FuboTV is a leading streaming specialist that focuses on sports. Though it has been somewhat successful in this niche, it has encountered several problems.
FuboTV remains unprofitable. At the same time, the company’s revenue and subscriber growth have declined sharply in recent periods. In the third quarter, fuboTV’s revenue increased by 20.3% year over year (less than half its top-line growth rate in Q3 2023) to $386.2 million.
FuboTV’s current situation is bad enough, though some might point out that it is improving on the bottom line. In the third quarter, the company’s net loss per share came in at $0.17, much better than the $0.29 reported in the year-ago period. That’s all well and good. However, fuboTV faces other important problems, including stiff competition.
Netflix is increasingly looking to get into the sports streaming niche. It recently hosted a live, highly anticipated boxing match. It will stream pro football games on Christmas Day.
These initiatives are not a significant threat to FuboTV — yet. However, Netflix could continue to dip its toes into sports streaming. And if it does, it could take market share away from fuboTV.
That’s not all. FuboTV is currently fighting a legal battle to stop Venu from being launched. Venu is a potential competitor to fuboTV backed by three media giants: Disney, Fox, and Warner Bros Discovery. If Venu ever sees the light of day,…
..
