FuboTV sports betting claims cited as ‘pure fantasy’ in class action lawsuit

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FuboTV, an American streaming television service that focuses primarily on live sports including NFL, MLB, NBA, NHL, MLS and international soccer, has become the subject of a class action lawsuit. 

New York law firm Wolf Haldenstein Adler Freeman & Herz LLP confirmed in a statement that the federal securities class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of investors who purchased or otherwise acquired common stock of fuboTV Inc from March 23, 2020 and January 4, 2021, inclusive.

The filed complaint alleges that throughout the class period, defendants made materially false and/or misleading statements. It is also alleged that there was failure to disclose to investors that Fubo’s growth in subscribers and profitability was unsustainable past the one-time seasonal surge, or that its offering of products would be subject to cost escalation.

Fubo also stands accused of failing to disclose that it could not successfully compete and perform as a sportsbook operator and could not capitalize on its online sports wagering opportunity

Furthermore, the accusers allege that Fubo’s data and inventory was not differentiated to allow it to achieve its long-term advertising growth goals and that its valuation was overstated considering its total revenue and subscription levels.

Lastly, it is alleged that the acquisition of California-based tech startup Balto Sports did not provide the stated synergies and internal expertise and did not expand the company’s addressable market into sports wagering.

Wolf Haldenstein Adler Freeman & Herz LLP cited the views of analyst Richard Greenfield of Lightshed Partners who, on December 23, 2020 initiated coverage of Fubo with a sell rating and an $8 one-year price target. In connection with initiating coverage, Lightshed called prospects of Fubo achieving success with sports betting a “pure fantasy”. 

On this news, the shares of Fubo declined $11.90, or 21.22% over two days to close at $44.18 on December 24, 2020.