Why FuboTV Stock Falls Today
shares Fubo TV (NYSE:FUBO) Shares surged last week after reaching a merger agreement with the company, then eased back a bit today disneyof (NYSE: DIS) Hulu + Live TV.
There isn't any company-specific news from Fubo today, but after digesting the news, investors may decide that the rally in Fubo stock is overdone. The sell-off also appeared to be fueled by a market risk-off day as bets grew that the Federal Reserve might not cut interest rates this year.
The stock was down 11.2% as of 1:10 p.m. ET.
The announcement of the Fubo/Hulu + Live TV deal last week cheered investors, with the stock more than tripling in one day.
In some ways, this makes sense, as Disney will own 70% of the new Fubo since Hulu + Live TV makes up the bulk of the new subscriber base. But many questions remain even after Disney canceled its sports streaming venture Venu, which was expected to be a competitor to Fubo. Fubo shares fell on Friday after the news was announced.
Today, investors appear to continue to question the strategic rationale for the merger. Fubo is not yet profitable, and Disney's streaming division has just become profitable, but it's unclear whether Hulu + Live TV will be profitable.
Additionally, stocks were broadly lower today as hopes of further Fed rate cuts appear to be fading amid a strong jobs report.
After the merger news came out, the rise in Fubo's stock price was a one-time rise, and the company or the merged company in the future will have to continue to deliver good news to make the stock move higher. With ESPN's flagship streaming service set to launch this fall, Fubo's future also seems unclear.
While this merger is better than Fubo continuing as an independent company, it's far from a guarantee for the streaming stock's success.
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