Shares of FuboTV (FUBO) are on the rise on Thursday after Barrington analyst James Goss initiated coverage of the stock with an Outperform rating. Meanwhile, in its quarterly letter to investors, David Einhorn's Greenlight Capital said that FuboTV going public led to significant gains for his fund and that the bear case misunderstands the company's sports wagering opportunity.
BUY FUBOTV: Barrington analyst James Goss initiated coverage of FuboTV with an Outperform rating and $40 price target. The analyst noted that FuboTV offers a streamed multichannel video programming distributor option featuring a complete programming package and "exceptionally intense" sports focus. The company's positioning offers a "very attractive proposition, especially for sports fans," he added. Gross also pointed out that while small, FuboTV is growing rapidly in competition with other streaming distribution vehicles as well as cable and satellite providers. FuboTV remains unprofitable, but its management is taking a "measured approach to the steps necessary" to achieve EBITDA and free cash flow breakeven and move into positive territory, he contended.
FUBOTV STAKE: In its quarterly letter to investors, David Einhorn's Greenlight Capital disclosed that its funds returned 25% in the fourth quarter, aided by the fact that "nearly the entire long book performed exceptionally well" in the three-month period. New positions established by the funds include Resideo (REZI), NCR Corp. (NCR) and Change Healthcare (CHNG), Greenlight said.
In addition, two of the firm's private investments went public and led to "significant gains," namely FuboTV and Danimer Scientific (DNMR). On FuboTV, Greenlight noted that bears contend that the company won't be able to compete with bigger players in sports wagering. However, he argues that the company's "integrated opportunity" is "qualitatively different" and thinks a better comparison will be to video gaming companies. FuboTV "expects to primarily earn profits on advertising and online sports wagering. Our average effective price (we owned shares and warrants) was $5. The shares surged from the $10 October IPO price to end the year at $28. The huge move brought to light a number of bear cases that we believe misapprehend [FuboTV's] lucrative opportunity in online sports wagering," Einhorn's Greenlight explained.
PRICE ACTION: In afternoon trading, shares of FuboTV have gained over 12% to $33.86.