FuboTV Sued for Securities Violations, Misleading Investors

On Wednesday, stockholders filed a class-action complaint against television streaming service FuboTV and several of its executives in the Southern District of New York, alleging that the company violated securities law by making materially misleading statements to investors, which caused stock prices to decline by more than 50 percent after the deception was revealed.

According to the complaint, “in its regulatory filings and public statements, Fubo positions itself as a content distributor at the intersection of three ‘megatrends’: cord-cutting, connected TV advertising, and online sports wagering.” The plaintiffs noted that FuboTV’s “revenues are almost entirely derived from the sale of subscription services and advertising in the United States.” 

The plaintiffs alleged that during the Class Period from March 23, 2020 to January 4, 2021, the defendants “disseminated false and misleading statements that misrepresented Fubo’s financial health and its operating condition.” For example, these purportedly misleading statements “included representations relating to a variety of Fubo’s business operations and performance metrics, including, among others, Fubo’s ability to grow subscription levels and future profitability, seasonality factors, cost escalations and potentially shrinking addressable market, ability to attract and generate advertising revenue, the Company’s valuation, and its prospects of entering the arena of online sports wagering.”

Specifically, the plaintiffs averred that the company promised large plans to scale in the sports wagering market, including acquiring Balto Sports, which, accordingly “significantly inflated the price of Fubo securities, and also created a false basis for its valuation and revenue projections.” However, the plaintiffs asserted that in actuality, FuboTV’s “prospects of scaling in the sports wagering business was far from realistic given its size and market share, a fact that investors were never apprised of.”

The plaintiffs proffered that starting December 23, 2020, investors began to learn the truth as a series of research reports were released. This report allegedly revealed that Fubo’s growth in subscribers and profit was not sustainable, costs to continue offering products would grow, the company could not capitalize on online sports wagering, its long-term advertising goals were not achievable, its value was overstated, and the Balto Sports acquisition did not provide the desired expansion. After the reports disclosed this information, the plaintiffs contended that the price of FuboTV’s stock “decline(d) 54% from a close of $52.59 on December 23, 2020 to a close of $24.24 on January 4, 2021.” Consequently, the plaintiffs asserted that they and the putative class have suffered significant losses and damages.    

The putative class consists of “all those who purchased or otherwise acquired Fubo shares during the Class Period; and were damaged upon the revelation of the alleged corrective disclosures.”

FuboTV is accused of violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

The plaintiffs sought class certification and for the plaintiffs to represent the class; an award for damages and other costs. The plaintiffs are represented by Lowey Dannenberg, P.C. and The Schall Law Firm.