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FuboTV faces legal action over sportsbook claims


Sports streaming service operator FuboTV is the subject of a class action lawsuit in New York over claims it misled investors concerning its acquisition of Balto Sports and prospects of achieving success as an online sportsbook operator.

The case against the New York-listed business has been filed at the Southern District of New York on behalf of investors who purchased or otherwise acquired common stock of Fubo from 23 March 2020 to 4 January 2021.

The class action period includes the date when Fubo acquired daily fantasy sports supplier Balto Sports in December 2020. At the time, Fubo co-founder and CEO David Gandler said the operator sees the “online wagering space as complementary to our sports-first live TV streaming platform”.

Wolf Haldenstein Adler Freeman & Herz LLP, leading the action, cited Lightshed Partners analyst Richard Greenfield’s claims in December that Fubo’s chances of achieving success in sports betting were “pure fantasy”. Lightshed further observed that the company “[may be] the most compelling short we have ever identified in our career as analysts”.

Wolf Haldenstein said that during the class period Fubo made materially false or misleading statements pertaining to the sustainability of its growth in subscribers and profitability, and likelihood of cost escalation.

It added: “Fubo could not successfully compete and perform as a sportsbook operator and could not capitalise on its online sports wagering opportunity.

“Fubo’s data and inventory was not differentiated to allow Fubo to achieve its long-term advertising growth goals.

“Fubo’s valuation was overstated considering its total revenue and subscription levels; and the acquisition of Balto Sports did not provide the stated synergies and internal expertise and did not expand the company’s addressable market into sports wagering.”

Following the Lightshed Partners analysis, Fubo’s share price declined $11.90, or 21.22%, over two days on the New York Stock Exchange to close at $44.18 on 24 December 2020.

The group’s share price is currently at $42.23, which is 32% lower than its all-time high of $62.00 on 22 December. It is up 75% on its $24.24 price of 4 January 2021 and 445% up on the $7.74 from 23 March 2020 – the end and start dates of the class action period.

Since the end of the class action period, Fubo has acquired sportsbook start-up Vigtory, a deal which the streaming service said will allow it to launch its own sportsbook this year. The acquisition is expected to close in the first quarter of 2021.

David Gandler said at the time: “We don’t see wagering as simply an add-on product to fuboTV. Instead, we believe there is a real flywheel opportunity with streaming video content and interactivity.

“Our free to play gaming experience, which will be available to all consumers, will build further scale to fuboTV, essentially acting as another lead generator for driving subscribers to our streaming video platform and, ultimately, our sportsbook. “We not only expect sports wagering to become a new line of business and source of revenue, but we also expect that it will increase user engagement on fuboTV resulting in higher ad monetisation, better subscriber retention and reduced subscriber acquisition costs.”