fuboTV Inc (FUBO:US)
12-month performance: +11%
Insider activity: Bullish
Insider buying pattern: Purchase from hedge fund represented on the BoD
Recent news: Strong trading update
Insiders at small firms often earn larger abnormal returns than insiders at large firms. This is due to the fact that smaller companies tend to be less researched than larger companies, meaning that they are often less efficiently priced.
In this report, we are going to flag some insider buying in a US small-cap stock, fuboTV Inc (FUBO:US). FuboTV is a provider of streaming services, with a focus on sports. It is listed on the New York Stock Exchange and currently has a market capitalization of $853 million.
FuboTV: insider buying
What’s caught our attention here is a large purchase from Waverley Capital. Waverley Capital is a venture capital group co-founded by Edgar Bronfman Jr – the Chairman of fuboTV – in 2017. Form 4 filings show that on 13 October, Waverley Capital purchased 200,000 FUBO shares at a price of $10.00 per share. The total cost of the transaction was $2.0 million.
Source: 2iQ Research
This insider activity looks interesting for several reasons. Firstly, Bronfman – who was an early champion of fuboTV – has significant experience in the media industry. Previously, he was Chairman and CEO of Warner Music. It’s likely he has deep insight into the company and its growth prospects.
Secondly, Bronfman is not the only insider to buy fuboTV stock recently. Our records show that in September, former CEO John Textor purchased FUBO stock five times. In total, the insider spent around $560,000 on shares.
Strong revenue growthFuboTV recently issued an excellent trading update. The company said that revenues for the third quarter are expected to be $50 to $54 million, a 27% to 38% increase year-over-year, driven by continued subscriber growth, an increase in subscription Average Revenue Per User (ARPU), and growth of advertising sales.
In addition, it raised its third-quarter subscriber guidance to 370,000 to 380,000, an increase of over 28% year-over-year and up from 20% growth previously forecast. Revenues for the fourth quarter are expected to be $68 to $75 million, a 53% to 68% increase year-over-year.
“The current quarter has been very strong for fuboTV with double digit revenue and subscription growth year-over-year as well as improvement in retention - all achieved during the ongoing pandemic” said CEO David Gandler. “Looking ahead, we are focused on driving revenue growth by increasing subscription and ad sales and improving engagement” he added.
Given this strong momentum, we see the insider buying here as a bullish signal.