Cautionary Tales: Two Stocks to Steer Clear of in 2025
When the market gets it wrong, savvy investors can capitalize on the opportunity. However, it’s essential to distinguish between undervalued gems and stocks that are cheap for a reason. Two companies that have significantly underperformed the market in recent years are fuboTV (NYSE: FUBO) and Chegg (NYSE: CHGG). Despite their low prices, these stocks are not worth investing in – here’s why.
FuboTV: A Struggling Streaming Specialist
FuboTV, a leading sports-focused streaming service, has encountered several problems. The company remains unprofitable, with declining revenue and subscriber growth. In the third quarter, revenue increased by 20.3% year over year, but this was less than half its top-line growth rate in Q3 2023. While fuboTV’s net loss per share improved to $0.17, the company faces stiff competition from giants like Netflix, which is increasingly venturing into sports streaming. Moreover, fuboTV is battling a legal fight to prevent the launch of Venu, a potential competitor backed by Disney, Fox, and Warner Bros Discovery. If Venu launches, it could be catastrophic for fuboTV.
Chegg: An Online Learning Platform in Peril
Chegg, an online learning platform, offers a subscription service providing students with expert help on textbook or homework problems. However, the rise of artificial intelligence (AI) has made Chegg’s services seem obsolete. AI chatbots like ChatGPT can assist students with essays and problem-solving across various disciplines. As a result, Chegg’s financial results and subscription growth have been dismal. In the third quarter, revenue declined by 13% year over year, and the company reported a net loss per share of $2.05. While Chegg has attempted to introduce AI-supported services, it’s uncertain whether these initiatives will succeed.
A Word of Caution
Before investing in fuboTV or Chegg, consider the risks involved. Both companies face significant challenges that could lead to further decline in their stock prices. Instead, it’s essential to focus on stocks with strong fundamentals and growth potential. By doing so, you can increase your chances of generating substantial returns in the long run.
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