FuboTV (NYSE:FUBO) stock has had its ups and downs, and the company’s shareholders could certainly use a shot in the arm today. It seems that the company is trying out a new pricing plan, but FuboTV’s investors have continued to dump their shares nonetheless.
FuboTV’s revised pricing plan wasn’t announced on the company’s investor news page. That’s already a sign that something might be amiss.
However, the news will certainly be known to FuboTV’s loyal subscribers, who may have to pay more for the same services they’ve been receiving all along. Reportedly, FuboTV informed its existing Starter-tier customers that their $64.99-per-month plan will be replaced with a pricier plan.
That plan is called the Pro tier, and it’s priced at $70 per month. For new FuboTV customers, the Pro tier will be the lowest-priced starter service tier.
The details have been published on a help-center page. Now, making adjustments for inflation might be understandable. Still, people might wonder whether FuboTV’s current and prospective customers be on board with this price hike.
Evidently, the Starter tier provided access to more than 100 channels. In contrast, the Pro tier offers over 115 channels of content.
This might sound reasonable, at first glance. It raises a question, though. Will FuboTV’s former Starter-tier customers resent being upgraded and charged more without their prior approval?
Needham analyst Laura Martin expects the price increase to result in “higher churn” in the second quarter. On the other hand, Martin anticipates that the positive effect will be “higher margins and more FCF [free cash flow].”
In other words, raising the service prices will be a double-edged sword. There will be more revenue coming in per customer, but some customers might terminate their service with FuboTV.
In any case, FUBO stock doesn’t appear to have benefited from FuboTV’s service price change, so far. Investors should remain wary of this move and consider staying small with their position sizes, if they choose to hold FuboTV shares at all.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.