Shares of fuboTV Inc. jumped on heavy volume Wednesday, and produced some bullish chart patterns in the process, after the sports streaming company reported revenue that more than doubled and raised its full-year outlook.
rose 8.9% in afternoon trading, as trading volume of 53.2 million shares was more than triple the full-day average. On Tuesday, the stock had dropped to a 6-month low in intraday trading, before bouncing to close up 8.1% ahead of first-quarter results released after the close.
Analyst Michael Pachter at Wedbush reiterated his outperform rating at $53 stock price target, which was 175.5% above current levels.
“We expect cord-cutting and cord-shaving to continue for the foreseeable future, and think that a sizeable portion of the population will grow up as ‘cord-nevers’, preferring customizable bundles of content to predetermined MVPD [multichannel video programming distributor] programming,” Pachter wrote in a note to clients. “FuboTV’s ability to offer comprehensive entertainment and sports viewing is a real differentiator, and its focus on the sports viewer/bettor should serve to accelerate subscriber growth.”
Late Tuesday, the company reported a net loss that widened to $70.1 million from $55.6 million, but a per-share loss that narrowed to 59 cents from $1.83, as weighted average shares outstanding nearly quadrupled to 118.58 million shares from 30.34 million shares.
That per-share loss was wider than the average analyst loss estimate of 55 cents, according to FactSet.
But revenue soared 135% to $119.7 million, beating the FactSet consensus of $103.9 million, as subscriptions and advertisements revenue, average revenue per user and number of subscribers all beat expectations.
Despite the two-day bounce, the stock has still lost 31.3% year to date, and 69.0% since it closed at a near two-year high of $62.00 on Dec. 22. The S&P 500 index
has gained 8.3% this year.
Bullish engulfing, followed by a breakaway gap
FuboTV’s stock has produced two chart patterns that are both seen by many as suggesting bullish trend reversals.
On Monday, the stock opened at $17.17, the high of the day, then dropped to an intraday low of $16.28 before closing at a six-month low of $16.35. Then on Tuesday, the stock gapped lower to open at $14.83, hit an intraday low of $14.64, then bounced to a high of $17.75 before closing at $17.67.
Candlestick chart followers call that type of two-day trading pattern a bullish engulfing trend reversal pattern. The idea is, after a long period of weakness to new lows, the sudden reversal higher depicts bulls launching a successful counterattack against bears that had run out of steam. Read more about bullish engulfing patterns.
Then on Wednesday, to help confirm the trend reversal implied by the bullish engulfing, the stock gapped higher to open well above a nearly four-month long downtrend line.
“When a gap initiates a trend, it is called a breakaway gap,” according to the CMT Association.
While rising above a downtrend line is enough for many on Wall Street to believe a new uptrend has started, the gap depicts an emphatic statement by bulls, while bears put up little resistance. Read more about breakaway gaps.
Given the strength of the selloff in recent months, there are many levels of potential resistance if the stock’s rally continues, including a previous area of congestion just below the $23 level, followed by previous support around $26.75.
To the downside, some levels to watch include the extended downtrend line, which currently extends to below $17.50, followed by the bottom of the bearish engulfing pattern, at $14.64.