Why fuboTV Stock Fell 13% Last Month

Shares of streaming-TV service fuboTV (NYSE: FUBO) fell 13.2% in May, according to data provided by S&P Global Market Intelligence. The company reported financial results for the first quarter of 2022 on May 5. And the market's negative reaction to the report entirely accounts for the stock's underperformance for the month.

FuboTV offers a streaming service that revolves around live sports. The company ended Q1 with over 1 million subscribers, which was an 81% increase from the first quarter last year. And Q1 revenue jumped 102% year over year to $242 million. These are sensational growth numbers, and yet the stock sold off after the report.

One of the primary ongoing concerns with fuboTV's business is its gross profit margin -- or lack thereof. If something costs $1 to make and it sells for $2, the gross margin is 50%. fuboTV doesn't own its live-sports content. Rather, it signs contracts for the rights to broadcast. And these contracts are part of its cost structure. And as it stands in Q1, its gross margin was negative 2%. In other words, it spent about $1.02 to generate every $1 of revenue -- and that's before other operating expenses. You don't have to be a math whiz to recognize that this isn't sustainable.

Source Fool.com