FuboTV Inc (NYSE:FUBO) is set to report first-quarter earnings after the closing bell on Tuesday.
When FuboTV printed its fourth-quarter 2020 earnings on March 2, it posted revenue of $105.1 million, which beat the Street estimate of $93.9 million. The company added an additional 92,800 subscribers in the quarter.
Although FuboTV posted a big beat, its stock ended the following trading day down over 18%.
A stock’s reaction to earnings is often arbitrary, and a beat doesn’t necessarily mean the share price will go higher or that an earnings miss will cause the stock to drop.
Traders will be interested to see if FuboTV was able to match its guidance for the first quarter of revenue of $101 million to $103 million and 520,000 to 530,000 subscribers.
FuboTV’s stock has been in a downtrend for months, and when a stock doesn’t run up into its earnings, there is a better chance it could have a positive reaction.
The FuboTV chart: FuboTV has been trading in bullish descending channel since Jan. 29, consistently making lower highs and lower lows in its decline. Bearish volume in FuboTV’s stock has been dropping off, however, and the stock’s daily trading range has been lessening, which indicates a reversal could be in play.
For the last nine trading days, FuboTV has been trading near the upper descending trendline of the channel but has been unable to break above. On May 6, the stock lost a support level at $18.30.
FuboTV is trading below the eight-day and 21-day exponential moving averages, with the eight-day EMA trending below the 21-day EMA, all which are bearish indicators. The stock is also trading under the 200-day simple moving average, which indicates overall sentiment in the stock is bearish.
Bulls want to see an increase of bullish volume come into FuboTV’s stock on an earnings beat or forward-looking guidance, push up out of the descending channel and regain support at $18.30. If the stock can regain the level as support, it has room to trade up toward the $26 area.
Bears want to see an increase in bearish volume and for FuboTV to continue trending downward in the channel until it loses another support level at $14.60. If FuboTV was unable to maintain that level, it could drop as far as the $9 mark before a potential bounce.
FUBO Price Action: FuboTV shares were down 9.91% at $14.73 in Tuesday's premarket session.
Photo courtesy of FuboTV.