Many stocks have tumbled in 2025. Fubo (FUBO -4.44%) has bucked the trend. In fact, the live streaming digital cable package has seen its stock soar more than 100% this year, making it one of the best performing stocks so far in 2025. This is mainly due to the new partnership and majority ownership stake Disney has taken in Fubo, ending current litigation between the two businesses and now combining live streaming services.

However, long-term shareholders in Fubo have suffered. The stock is down 95% from highs set close to five years ago and even worse over the last two decades. Does the Disney partnership mean a comeback is destined for Fubo stock as it currently trades below $3 a share? Or is the future going to look more like the past?

The answer is clear if you focus on what matters.

Solid growth but lack of profitability

Fubo's business model is to recreate the cable package and sell it virtually over the internet. By focusing on obtaining sports rights, the company has been able to attract subscribers to its service in a hypercompetitive market. In 2024 the company hit around 1.7 million subscribers and $1.62 billion in revenue. Revenue is up 113% in the last three years.

There is a major problem with this business model: the cost of sports rights. Sports leagues and teams negotiating with media distribution partners are essentially monopolies, giving them a ton of bargaining power versus a small player like Fubo. Unsurprisingly, this shows up on Fubo's income statement. Fubo's rights and broadcasting transmission costs combined to $1.42 billion last year, or 87% of its revenue. Gross margins are slim at this business, and I am not a fan of the unit economics.

Add in sales and marketing, technology, and general overhead costs, and Fubo does not generate a profit. Last year, it had an operating loss of $196 million. It hasn't generated an operating profit in any of the past 10 years.

A Disney partnership or bailout?

If Fubo has been consistently unprofitable, then you might question why the stock is soaring in 2025. The answer is its new partnership and investment from Disney. As a part of the deal, Disney will now own 70% of Fubo, combine its Hulu Live TV competitor with Fubo, and infuse it with cash. Importantly, litigation between the two companies is now over. Fubo was suing Disney and other media networks over a proposed direct-to-consumer (DTC) streaming service focused on sports content.

While Disney is a large partner with plenty of money, it is hard to see how this fixes the core problem of sports media rights. The reason Fubo spends so much money on content costs is because media companies like Disney have to fork over large sums every year to obtain the right to distribute live video of leagues like the National Football League. Even though Disney and Fubo will now be working together, most of the revenue generated from sports-focused content will still be paid to these sports leagues.

FUBO Operating Margin (TTM) data by YCharts.

The hard truth about Fubo stock

Fubo has never generated a profit. Disney's scale could help Fubo with advertising sales and economies of scale, but it doesn't change the fundamental flaw of the virtual cable model. Sports leagues have all the power, and that isn't changing.

In fact, increasingly, sports fans are able to access content outside of the cable package. American football is now available on many different streaming services. The NBA will soon be available on Amazon Prime. Baseball and hockey teams are steadily moving to DTC models. Major League Soccer is exclusive on AppleTV+. Even Fubo's partner in Disney is going to make a subscription service for ESPN in the near future.

For a consumer, if they can significantly reduce the cost of accessing sports by directly subscribing to the leagues/teams they watch, what is the point of the Fubo bundle? I don't see a reason this business needs to exist. Fubo stock has been a huge loser over the long term. Expect this to continue despite the new partnership with Disney.