Posted on: Feb 22, 2021, 11:57 am.
Last update on: February 23, 2021, 01: 11h.
A class action lawsuit has been filed against fuboTV in a federal court. Investors in the sports-centric streaming service claim executives misled them about the company's profitability and its competitiveness in sports betting.
David Gandler, co-founder of Fubo, was among the executives named in a class action lawsuit filed by investors alleging the company provided misleading information about various aspects of the company. (Image: Fubo)
The lawsuit, which was filed in the U.S. District Court for the Southern District of New York last Wednesday, is directed to individuals who purchased the company's stock between March 23, 2020 and January 4. Investors claim a series of reports released as of December 23rd revealed the company's flaws. This caused the stock to jump from $ 52.29 that day to $ 24.24 on Jan. 4th. This corresponds to a loss in value of 54 percent.
The lawsuit lists not only the company but also members of the executive team. These include Co-Founder and CEO David Gandler, Executive Chairman Edgar Bronfman Jr. and CFO Simone Nardi. One of the damages sought by the plaintiffs is the reimbursement of the loss in stock value suffered.
According to a press release from the law firm Wolf Haldenstein Adler Freeman & Herz LLP, investors have until April 19 to join the lawsuit.
Casino.org reached out to Fubo officials late Monday for comment on the lawsuit.
Balto purchase checked for sports betting value
The lawsuit concerned, among other things, the takeover of Balto Sports in December.
At the time, fuboTV executives said the move would help prepare the streaming service for entry into the sports betting business by leveraging Balto's technology to offer free contests.
One of the founders of Balto is Nick Montana, the son of legendary NFL quarterback Joe Montana.
However, the lawsuit cites a damning report that was released later this month. Investment firm Kerrisdale claimed the purchase was just a PR move to boost the share price.
The acquisition of Balto Sports, a company with 3 employees and no valuable intellectual property, is not a "first step" towards sports betting, but proof that the company is just making a story about running a sports book and not preparing deliver it. ”Explained the Kerrisdale report. "The only way fubo can benefit from sports betting is through a marketing partner whose profitability is negligible in relation to the current share price."
The report also found that fubo's third quarter took advantage of a sports anomaly due to the COVID-19 crisis. The pandemic moved the postseason for the NHL and NBA to August, September and October. This placed these games alongside the MLB playoffs and the regular college and pro football games of the season. As a result, a historical inventory of games was created unlike any seen before.
Unsurprisingly, Kerrisdale acknowledged he'd cut shares in Fubo.
In order not to be discouraged, fubo continued its shopping spree for sports betting in January and acquired the mobile sports betting provider Vigtory.
Fubo shares on the Wall Street roller coaster
Speaking of shorts, Fubo himself was caught up in the Wall Street madness. In the past month, it was the second most-severely cut stock behind WallStreetBet's favorite GameStop.
Therefore, the share price has been kind of a roller coaster ride over the past few months. The 52-week high was $ 62.29 two months ago on December 22nd.
However, just a week earlier, the stock was trading at around $ 27 per share. As the lawsuit notes, the price fell back into that range in early January.
The wild ride continued throughout the month when the stock hit $ 52.40 on Feb.1, but has declined since then, albeit more gradually this time.
At the close of trading on Monday, fubo's shares were trading at $ 40.82.