Investors File Suit Against FuboTV, Say Execs Misled About Sports Betting Plans
Posted on: February 22, 2021, 11:57h.
Last updated on: February 24, 2021, 02:43h.
A class-action lawsuit has been filed in federal court against fuboTV. Investors in the sports-centric streaming service claim executives misled them about the company’s profitability and its ability to compete in the sports betting realm.
The suit, filed last Wednesday in the US District Court for New York’s Southern District, is for people who purchased the company’s stock between March 23, 2020, and Jan. 4. Investors claim a series of reports released starting on Dec. 23 unveiled the company’s shortcomings. That led to the stock going from $52.29 on that day to $24.24 on Jan. 4. That represents a drop of 54 percent in value.
The lawsuit not only lists the company but also lists members of its executive team. That includes Co-Founder and CEO David Gandler, Executive Chairman Edgar Bronfman Jr., and CFO Simone Nardi. Among the damages, the plaintiffs seek is reimbursement for the loss of stock value they sustained.
According to a press release from the law firm of Wolf Haldenstein Adler Freeman & Herz LLP, investors have until April 19 to join the suit.
Casino.org reached out to fubo officials late Monday for comment on the lawsuit.
Balto Purchase Scrutinized for Sports Betting Value
Among the moves in question, according to the lawsuit, was the acquisition of Balto Sports in December.
At the time, fuboTV executives said the move would help prepare the streaming service to get into the sports betting business by leveraging Balto’s technology to offer free-to-play contests.
Balto’s founders include Nick Montana, the son of legendary NFL quarterback Joe Montana.
However, the lawsuit cites a scathing report published later that month by investment firm Kerrisdale that claimed the purchasing was simply a public relations move to push up the stock price.
“Rather than a ‘first step’ toward sports wagering, the acquisition of Balto Sports, a company with 3 employees and no valuable IP, is proof the company is simply spinning a story around running a sportsbook, not actually preparing to deliver on it,” the Kerrisdale report stated. “The only way fubo will capitalize on sports betting is as a marketing partner, the economics of which are immaterial relative to the current stock price.”
The report also stated that fubo’s third-quarter took advantage of what was a sports anomaly because of the COVID-19 crisis. The pandemic pushed the postseasons for the NHL and NBA into August, September, and October. That put those games alongside MLB playoffs and regular season college and pro football games. As a result, it created a historic inventory of games the likes of which had not been seen previously.
Not surprisingly, Kerrisdale acknowledged it had shorted shares of fubo.
Still, not to be daunted, fubo continued its sports betting buying spree in January by acquiring mobile sportsbook operator Vigtory.
Fubo Shares on the Wall Street Roller Coaster
Speaking of shorts, fubo itself was caught up in the Wall Street craze. Last month, it was the second most-shorted stock behind WallStreetBets darling GameStop.
As such, the stock price has been on somewhat of a roller coaster ride over the past couple of months. Its 52-week high came two months ago at $62.29 on Dec. 22.
However, just the week before, the stock was trading at around $27 a share. As the lawsuit notes, the price went back down to that range by early January.
The wild ride continued through the month, as the stock reached $52.40 on Feb. 1. But since then, it’s trended down, albeit more gradually this time around.
At the close of trading Monday, fubo’s shares were going for $40.82.
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