Mad Hedge Technology Alerts!
I was going to hold off on writing about this streaming service, but the shares are up another 15% this morning on a down day and that has forced my hand.
Streaming platforms have done extremely well during the pandemic and it is a no-brainer to put two and two together because consumers stuck at home would obviously mean more streaming consumption.
But what about those streaming services that you have not heard about?
They do exist and now I am here to tell you about one of them.
Enter fuboTV (FUBO).
FuboTV is an American streaming television service that focuses primarily on channels that distribute live sports, including NFL, MLB, NBA, NHL, MLS, and international soccer, plus sports news, network television series, and movies.
Yes, I must admit that fuboTV isn’t the newest company. The company was established in 2015 and some of the hardcore streamers will see this service pop up on their Roku (ROKU) amongst other platforms.
After a more focused migration into live sports television, a key deal to bring Disney’s ESPN to its platform, and a pair of acquisitions to allow sportsbook operations beginning in 2021.
FUBO has potential and is already showing robust growth backed by the kind of subscriber numbers needed to turn an eventual profit.
November’s third-quarter print showed accelerating subscriber growth from 58% to 72% and sales surging from 71% to 80%.
I am quite positive on FUBO’s ability to monetize traffic at much higher rates than its competitors.
That includes streaming hardware darling Roku, which captures less than one-third of FUBOs per user ad revenue.
FUBO had just 545,000 subscribers entering into 2021, but its free-spending audience that totals an average of four hours a day streaming the platform is a bedroom piece of foundation to this upstart company.
It is generating an average $7.50 in monthly ad revenue per user, and that's on top of the $65 monthly fee for the entry-level plan featuring 118 different channels.
The big selling point for fuboTV is that more than three dozen of those networks are dedicated sports channels.
FUBO’s capture of ESPN last summer was a coup, but it also dropped Turner's sports-heavy properties.
It’s true that it is not the perfect service, and is missing some crucial content.
They are also not carrying Sinclair's regional sports channels.
Cord cutters are helping this stock be hard to bet against after joining the services in droves in 2020.
FUBO actually was laser-focused on European soccer at the beginning but understood they needed to branch out to capture other pro sports fans and widen its audience.
Unlike Netflix, advertising is a key component in the company's revenue. It works with top ad-tech companies like The Trade Desk (TTD) and Magnite, and these partnerships are helping it with growth.
In the third quarter, ad revenue grew 153% year over year.
FUBO's ad business is already far ahead of Roku's, perhaps demonstrating the greater monetization potential of live sports and TV compared to on-demand streaming.
FUBO believes it can generate more than $20 in ARPU after paying the third-party vendors it works with.
A net loss of $402.5 million through the first nine months of 2020 is standard for most teething growth companies and the unprofitability shouldn’t stop investors from this stock.
If you do choose to dip your toe into this stock, then be aware the volatility might make you feel unsteady at night.
The wild swings are a sign of an immature company growing into its investor base.
Mad Hedge Technology Letter
January 27, 2021
Fiat Lux
Featured Trade:
(DINOSAURS OF TECH REINVENTING THEMSELVES)
(BB), (AMZN), (BIDU), (GME)
Tech companies change so quickly that sometimes companies have no choice but to reinvent themselves and that is exactly what BlackBerry (BB) has done as their stock has already delivered gains of 190% in 2021.
Historically known as a hardware business, BlackBerry decided to opt out of its legacy operations and elect for a push into enterprise software, internet of things (IoT), and cybersecurity, pivoting away from handsets as that business flagged.
That is where all the serious tech money is these days.
A torrent of positive announcement has rallied investors to this stock with the company announcing an expanded partnership with Baidu (BIDU) that will see it continue working on automated high-definition mapping software that Baidu uses in its autonomous driving technology.
Baidu is a Chinese tech company that is also hoping to reinvent themselves away from their legacy business of internet search.
Data and connectivity are opening new avenues for innovation in the automotive industry, and BlackBerry and auto companies share a common vision to provide automakers and developers with optimal data so that they can deliver new services to consumers.
The tie-up with Baidu caused the stock to shoot higher by 17.3% at $21.15 in premarket trading.
This move broadens the company's use of BlackBerry’s operating system in its "Apollo" autonomous driving open platform.
Under the expanded partnership, Baidu’s high-definition map will be integrated with BlackBerry’s QNX Neutrino real-time operating system.
The integrated system will be mass-produced and available on Guangzhou Automobile Group electric vehicle arm’s upcoming GAC New Energy Aion models.
The BlackBerry QNX software scores high in functional safety, network security, and reliability, while Baidu has achieved long-term development in artificial intelligence and deep learning.
GAC is one of China’s largest automakers. It also manufactures the Hycan 007 cars under a joint venture with EV startup NIO.
This is just an example of how BB is running to the part of the end zone where the ball is going to be thrown unlike other dinosaur tech like IBM.
The company’s stock has recently been included in strong dialogue on online message boards such as Reddit, which like GameStop (GME) has felt a sharp appreciation in price or probably better describes as rocket boosters.
GME is up 100% just today which can only be described as an epic short squeeze.
At a strategic level, the success of BlackBerry’s stock can be attributed in part to the strategic shift to cybersecurity and the Internet of Things.
The shift away from handheld devices is long due, and so what's really happening is the market is putting its stamp of approval on this new shift of BlackBerry away from its old business model and what it’s doing now.
BB holds more patents than any other company in Canada.
BlackBerry shares spiked as much as 20% after settling a patent infringement suit with Facebook.
BlackBerry first targeted Facebook with a lawsuit back in 2018, filing a 117-page complaint accusing the social network of infringing on Blackberry's innovative messaging technology.
The settlement removed any litigious uncertainty offering another clear pathway for the stock to rise.
The biggest strategic overhaul has been its recent partnerships with Amazon (AMZN) Web Services in December to use its cloud services.
They signed an agreement with Amazon for BB to develop a software platform that allows automakers to read vehicle sensor data, improving cloud-connected vehicles' performance.
Blackberry announced it sold 90 patents to China's largest phone manufacturer, Huawei.
Automakers can use this information to create responsive in-vehicle services that enhance driver and passenger experiences.
BlackBerry IVY addresses a critical data access, collection, and management problem in the automotive industry.
Cars and trucks use many different parts, with each vehicle model comprising a unique set of proprietary hardware and software components.
These components, which include an increasing variety of vehicle sensors, produce data in unique and specialized formats.
The highly specific skills required to interact with this data, as well as the challenges of accessing it from within contained vehicle subsystems, limit developers’ abilities to innovate quickly and bring new solutions to market.
BlackBerry IVY will solve these challenges by applying machine learning to that data to generate predictive insights and inferences, making it possible for automakers to offer in-vehicle experiences that are highly personalized and able to take action based on those insights.
Although many legacy tech companies get caught in the weeds, never to grow again. BB has sorted out its vision and is well on its way to delivering shareholder value back to the end investor.
Even though I would say the short-term price action in BB is at this point euphoric, it would serve any tech investor well to dip their toe into this stock long term when there is a pullback.
