TLDR: During COVID lockdowns, FUBO reached a share price of $62.29. This time around, we estimate FUBO may reach a conservative share price between $20 – $30 if retail is able to maintain the momentum from similar stocks such as GME and AMC.
The stock market is no stranger to volatility, and one of the most intriguing phenomena in recent years has been the short squeeze. A short squeeze occurs when a heavily shorted stock’s price begins to rise sharply, forcing short sellers to cover their positions by buying the stock, which in turn drives the price even higher. Fubo TV (FUBO), a sports-focused streaming service, is currently garnering attention as a potential candidate for a massive short squeeze. But what factors are contributing to this speculation, and is FUBO truly poised for such a dramatic event?
Understanding Fubo TV and Its Market Position
Fubo TV offers live streaming of sports, news, and entertainment channels, positioning itself as a competitor to traditional cable and other streaming services like Hulu + Live TV and YouTube TV. With a strong emphasis on sports content, Fubo TV appeals to a niche but dedicated audience. The company’s growth has been fueled by the cord-cutting trend, with more consumers opting to replace their traditional cable subscriptions with streaming services.
Current Market Sentiment and Short Interest
One of the primary indicators of a potential short squeeze is the level of short interest in a stock. Short interest refers to the number of shares that have been sold short but not yet covered or closed out. As of recent reports, FUBO has an exceptionally high short interest (22% – According to Fintel), with a significant percentage of its float being sold short. This indicates that many investors are betting against the stock, expecting its price to decline.
However, high short interest alone isn’t enough to trigger a short squeeze. There must be a catalyst that drives the stock price upward, causing short sellers to scramble to cover their positions. In Fubo TV’s case, several factors could act as potential triggers.
Meme Stock Momentum: The GME and AMC Effect
A significant driver behind the potential for a short squeeze in FUBO is its grouping with meme stocks like GameStop (GME) and AMC Entertainment (AMC). These stocks have gained notoriety and immense retail investor interest, primarily driven by social media platforms like Reddit’s WallStreetBets. This week, both GME and AMC have experienced high trading volumes and substantial share price increases, sparking renewed interest in stocks with similar profiles.
The meme stock phenomenon is characterized by coordinated buying efforts from retail investors, often aiming to challenge institutional short sellers. Fubo TV, with its high short interest and potential for dramatic price movements, fits well into this category. As retail investors look for the next big short squeeze opportunity, FUBO’s association with GME and AMC could drive significant buying activity.
Positive Earnings Reports and Subscriber Growth
Another potential catalyst for a short squeeze in FUBO is the company’s financial performance. If Fubo TV reports better-than-expected earnings or significant subscriber growth, it could lead to a surge in investor confidence and buying activity. Positive news regarding partnerships, content acquisitions, or technological advancements could also drive the stock price higher.
Broader Market Trends and Sentiment
The broader market environment can also play a role in the potential for a short squeeze. If the overall market sentiment becomes more bullish, with investors more willing to take on risk, stocks with high short interest like FUBO may experience increased buying pressure. Additionally, the heightened attention on meme stocks could amplify these effects. The phenomenon witnessed with stocks like GameStop and AMC, where coordinated buying efforts led to explosive short squeezes, could similarly impact FUBO.
Analyst Upgrades and Institutional Interest
Analyst ratings and institutional interest can significantly influence a stock’s price movement. If reputable analysts upgrade their ratings or increase their price targets for Fubo TV, it could attract more buyers and put further pressure on short sellers. Similarly, increased institutional ownership or investment from well-known funds can boost investor confidence and contribute to upward price momentum.
Technical Indicators and Trading Volume
Technical indicators and trading volume patterns are also critical in assessing the likelihood of a short squeeze. If FUBO’s stock price breaks through key resistance levels with high trading volume, it could signal the start of a bullish trend, prompting short sellers to cover their positions. Monitoring these technical factors can provide insights into potential price movements and the timing of a short squeeze. During COVID lockdowns, FUBO reached a share price of $62.29. This time around, we estimate FUBO may reach a conservative share price between $20 – $30 if retail is able to maintain momentum from similar stocks such as GME and AMC.
Risks and Considerations
While the potential for a short squeeze in FUBO is enticing, it’s essential to consider the risks. Short squeezes are inherently speculative and can lead to extreme volatility. Investors should be cautious and conduct thorough research before making investment decisions. Additionally, market conditions and company-specific factors can change rapidly, impacting the likelihood of a short squeeze.
Conclusion
Fubo TV (FUBO) is attracting significant attention as a candidate for a short squeeze, driven by its high short interest, potential positive catalysts, and broader market trends. The stock’s association with meme stocks like GameStop and AMC, which are currently experiencing high trading volumes and share price increases, further adds to the speculation. While the ingredients for a short squeeze are present, investors should approach with caution and remain vigilant. Whether FUBO will indeed experience a giant short squeeze remains to be seen, but the stock undoubtedly presents an intriguing opportunity for those willing to navigate its risks and rewards.