There's a Big Problem With FuboTV Stock

FuboTV (NYSE: FUBO), the sports-centric streaming service that saw its stock rocket higher in 2020, is nowhere close to turning a profit. The company generated revenue of $61.2 million and an operating loss, excluding one-time impairment charges, of $65.5 million in the third quarter.

FuboTV isn't profitable because the direct costs of delivering its service are higher than revenue. Subscriber related expenses, which include affiliate distribution rights and cloud computing charges, among other things, were slightly higher than revenue in the third quarter. Broadcasting and transmission costs added another $9.8 million to the toll.

What's worse, a big chunk of these expenses go up right along with the subscriber count. According to the company's S-1 filing with the SEC: "The cost of affiliate distribution rights is generally incurred on a per subscriber basis and are recognized when the related programming is distributed to subscribers." In other words, fuboTV is no Netflix. Operating leverage will be hard to come by with fuboTV's business model.

Source Fool.com