Shares of sports and live TV streaming service fuboTV (NYSE: FUBO) fell 5.9% in afternoon trading after the streaming giant and industry peer Netflix reported disappointing third-quarter results, creating negative sentiment in the sector.
Streaming leader Netflix missed its profit targets due to a large and unexpected tax burden in Brazil. Additionally, the company’s revenue guidance for the upcoming fourth quarter fell short of investors’ expectations. This dual front of disappointing news from an industry bellwether has raised concerns about the health of the streaming market as a whole.
The stock market overreacts to news, and large price declines can present good opportunities to buy high-quality stocks. Is now the time to buy fuboTV? Access our full analysis report here.
Shares of fuboTV are extremely volatile and have seen 58 moves greater than 5% in the last year. In this context, today’s development indicates that the market considers this news significant, but not as something that would fundamentally change its perception of the company.
The previous big move we talked about happened 12 days ago, when the stock fell 3.2% following news that concerns about deteriorating trade relations with China were triggered by critical comments from President Donald Trump.
The president’s comments, declaring on social media that China has “become very hostile”, injected significant volatility into broader markets. This particularly affected the leisure sector, which is very sensitive to economic conditions and discretionary spending. Leisure stocks, which include travel, entertainment and hospitality companies, depend on consumers feeling confident enough to spend on non-essential goods and services. Trump has targeted strengthening Chinese controls on rare earth metals, which are essential components of many technology products, from electric vehicles to defense systems. The president’s tone and suggestion to cancel a meeting with President Xi caused a rapid sell-off in the market.
Earlier in the week, China announced new export controls on essential minerals. Beijing’s Commerce Ministry said foreign suppliers now need government approval to export products containing certain rare earths. These materials are essential for the production of high-tech goods, including computer chips, electric vehicles and defense technologies. Analysts view the move as a strategic assertion of China’s dominance in the global rare earth supply chain, particularly amid ongoing trade tensions. The prospect of higher tariffs is raising concerns that economic woes could lead to a slowdown in consumer spending. If consumers tighten their budgets in response to economic uncertainty, discretionary purchases are often the first to be cut, which directly impacts the revenues of companies in this sector.
