Two Undervalued Stocks Under $5 to Watch in August: Nextdoor and FuboTV.

Two stocks trading under $5 that are worth considering are Nextdoor and FuboTV. Nextdoor is a cash-rich company with a potential for growth, despite its current unprofitable state. FuboTV's partnership with Disney could provide long-term upside potential. Both stocks are speculative and investors should be aware that there are risks involved.

In the realm of sub-$5 stocks, two companies stand out for their potential: Nextdoor (NYSE: NXDR) and FuboTV (NYSE: FUBO). Both companies present intriguing investment opportunities, albeit with significant risks.

Nextdoor: A Cash-Rich Social Media Stock

Nextdoor, a social media company, is trading under $2 per share. Despite its current unprofitable state, the company boasts a strong cash position, with $413 million in cash and short-term investments, and no debt. Its market cap is $714 million, suggesting that the market values its business at approximately $300 million.

The company's recent moves under new CEO Nirav Tolia are promising. Tolia rejoined the company last year and has been leading efforts to streamline operations and enhance the platform's engagement. A restructuring plan aims to trim operating expenses by $30 million annually, which could potentially achieve adjusted EBITDA profitability by 2026.

Moreover, the platform has undergone a major overhaul to boost engagement and monetization. However, it is essential to note that a clear path to sustainable profit growth may take time. Investors should be prepared for the possibility that Nextdoor's efforts may not yield immediate results.

FuboTV: A Streaming Service with Disney Partnership Potential

FuboTV, a streaming service, has seen its prospects improve significantly with its partnership with Disney. The company agreed to merge with Hulu, which is a fully owned subsidiary of Disney. This deal could triple FuboTV's subscriber base and provide access to a broader content library.

Financially, the merger brings a $220 million cash infusion, bolstering FuboTV's balance sheet. Currently, the company has $284 million in cash and about $340 million in long-term debt, resulting in a net cash position. Even if the deal falls through, FuboTV stands to receive a $130 million termination fee.

Recent results from FuboTV have been encouraging, with revenue and subscriber numbers exceeding guidance, and the net loss being cut in half year-over-year. However, the company's long-term success depends on the success of its partnership with Disney.

Risks and Considerations

Both Nextdoor and FuboTV are speculative investments. There is no guarantee that Nextdoor's platform overhaul will lead to sustained revenue growth, nor is there a certainty that FuboTV's partnership with Disney will produce the desired results. Investors should be cautious and limit their position size, only investing money they can afford to lose.

Conclusion

Nextdoor and FuboTV present intriguing opportunities for investors seeking sub-$5 stocks. Nextdoor's cash-rich position and platform overhaul, along with FuboTV's potential partnership with Disney, offer potential upside. However, the risks are significant, and investors should approach these stocks with caution.

References

[1] https://www.aol.com/2-stocks-under-5-buy-130300895.html
[2] https://www.nasdaq.com/articles/2-stocks-under-5-buy-august-0