Netflix is king of the streaming realm, but a smaller player could emerge as the biggest winner of all in 2025.
Last year, the S&P 500 and Nasdaq Composite soared by 23% and 29%, respectively. When the markets are this generous, it’s pretty tough to lose money.
However, if you bought shares in sports-centric streaming stock FuboTV (FUBO -1.36%) in January 2024, you would have been down 60% by December. Not good. When you layer in the fact that Netflix stock gained 83% in 2024 — thanks in large part to its own foray into live sports broadcasting — you might be wondering if FuboTV is just doomed.
Well, I haven’t given up on the smaller streaming company. In fact, I think FuboTV could be the top-performing streaming stock to own in 2025. Here’s why.
Netflix’s rise comes at a price
2024 was a milestone year for Netflix. In addition to several new miniseries and movies added to its catalog, Netflix proved that its low-cost advertising tier has resonated with subscribers while also demonstrating an ability to diversify its platform through the introduction of live sporting events.
On the surface, this is all good news for Netflix. With shares trading close to all-time highs, I’d say investors are quite bullish on the future of Netflix.
While I think Netflix remains in a solid position among a sea of competitors, it’s important to remember that when companies experience prolonged periods of success, investor expectations begin to rise. If Netflix shows any sign of deceleration or fails to meet lofty expectations from Wall Street, the stock could get whacked.
So even though there is still a lot of long-term growth potential in Netflix stock, given its various new business opportunities, investors may want to consider other options in the streaming realm that have not experienced as dramatic a run-up compared to Netflix stock.
Image source: Getty Images.
FuboTV just found a little bit of magic
FuboTV is a streaming platform that primarily focuses on live sports. While the company has witnessed considerable growth in its subscriber base, FuboTV remains unprofitable and faces fierce competition from Alphabet’s YouTube TV, Apple, and Amazon — all of which offer some degree of sports broadcasting.
Well, earlier this month, media behemoth Disney took out its magic wand and put a well-received spell on FuboTV. Remember, Disney operates streaming platform Hulu and is also home to a number of broadcast networks that televise sports events, such as ABC and ESPN.
According to the press announcement, Disney plans to merge its Hulu + Live TV offering with FuboTV. To be crystal clear, this is not going to provide Fubo direct access to Hulu’s 47 million subscribers. Rather, Disney is effectively carving out a portion of the broader Hulu ecosystem (namely the Live TV aspect) and combining it with Fubo.
Nevertheless, I see this partnership as a huge tailwind for Fubo investors. According to transaction details, Fubo and Hulu + Live TV will be home to more than 6 million subscribers — almost fourfold what FuboTV boasts alone right now.
On top of that, Fubo’s management noted to investors that the combined entity will be cash flow positive following the completion of the deal.
All told, I see the relationship with Disney as transformative for the future of Fubo. I think the addition of Disney’s sports-themed broadcast networks and significantly larger subscriber base in the combined company (the new Fubo) opens up a lot of opportunities in marketing, advertising, and potentially even sports betting down the road.
Should you buy FuboTV stock right now?
While the deal with Disney makes Fubo stock a lot more tempting, it’s important to consider all angles before opening a position. As the chart illustrates, shares of FuboTV are up more than 3x since bottoming last summer. The entirety of these gains took place in early January, following news of the merger with Hulu + Live TV.
FUBO data by YCharts
This level of momentum could suggest that some of the upside is already priced into Fubo stock. With that said, Fubo’s current valuation could still be reasonable.
According to Reuters, the combined entity of Fubo and Hulu + Live TV will generate $6 billion in revenue. Right now, FuboTV’s market capitalization is just $1.3 billion. This implies a price-to-sales (P/S) multiple of just 0.22 — and remember, Fubo is expected to be profitable following the closure of the deal, too.
While there is certainly execution risk in this deal, I think there is significant upside in FuboTV overall. For these reasons, I think further gains are on the horizon for FuboTV, and that 2025 will be a transformative year for the company.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, and Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Netflix, Walt Disney, and fuboTV. The Motley Fool has a disclosure policy.
