Is FuboTV: A Buy, Sell, or Hold in 2025?

In early January, FuboTV's (NYSE: FUBO) story dramatically changed when it agreed to merge its business with Hulu. FuboTV's stock rose sharply as investors applauded the deal it made with media giant Disney (NYSE: DIS). Should you buy, sell, or hold FuboTV stock in 2025 before the transaction is completed?

Buy FuboTV

The reason to buy FuboTV is because you believe the hype around the business combination that has been proposed. There are a lot of benefits that will come along with the deal. For example, FuboTV's subscriber base will jump from around 1.7 million subscribers at the end of 2024 to as many as 6.2 million once it has taken on the much larger Hulu business.

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Image source: Disney.

But that's just one of the benefits. In addition to that, FuboTV will receive a cash infusion from Disney and other Hulu partners to the tune of $220 million. That will help with the integration of the two businesses and allow FuboTV to buy content. Then, there are the synergies that could arise, including FuboTV's ability to provide more diverse content offerings to subscribers. Effectively, it will jump into the big leagues of the streaming industry.

If you believe that this business combination will set the company up for future success, you might want to buy it in 2025 before the deal is finalized.

Hold FuboTV

The reason to hold FuboTV is basically the same reason you might want to buy it. In fact, it seems like it would be an odd decision to sell it now if you owned it in the belief that it would, someday, become a material competitor in the streaming space. Indeed, that day could be here, assuming the deal is consummate as expected.

That said, if the deal doesn't get consummated, the stock will probably fall. But FuboTV won't walk away empty-handed. There is a $130 million termination fee payable to FuboTV built into the transaction. So, FuboTV would be the same company it is today if the Hulu deal falls apart, only with the addition of an extra $130 million. You would basically own a better-positioned company in what many would consider a worst-case scenario for this transaction.

Sell FuboTV

There are a lot of reasons to like the FuboTV/Hulu tie-up. But there are some reasons to be worried, though they are a bit nuanced. After the transaction is complete, Disney will control 70% of FuboTV's shares and have effective control of the board of directors, which will be majority-appointed by Disney. There is a very real risk that FuboTV is run for the benefit of Disney, its largest shareholder, and not for all of the other investors that are just tagging along for the ride.

FUBO data by YCharts

The real problem here is that FuboTV is going to be buying content from Disney, noting that this deal specifically includes carriage agreements for sports content. It is entirely possible that Disney charges so much for content that FuboTV ends up being only modestly profitable or even runs its business at a loss. This is a glass-half-full outcome, but it would basically mean that FuboTV is nothing more than a vassal to Disney.

This is a negative but completely realistic view of the situation. If you have a big gain after FuboTV's sizable stock price jump, you might want to take the cash and move on. Indeed, even though the stock has begun to pull back from its post-news highs, it is still up more than 100% so far this year.

The outcome is uncertain

The deal for FuboTV to take on the Hulu business sounds great, but that doesn't mean that it will be a winner for shareholders over the long term. If you have a positive view of the translation, you will probably want to stick around or even buy the stock. But if you have questions about what comes next, given the dominance that Disney will have over FuboTV's business decisions, you might want to cut and run before this deal gets completed.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney and fuboTV. The Motley Fool has a disclosure policy.