The factual entertainment provider turned in a solid quarter, keeping it on pace for a big year of growth.

John

Key Points

  • The results were within expectations, but investor sentiment is turning bullish on the prospects for smaller streaming providers.

What happened

Yesterday CuriosityStream (NASDAQ:CURI) delivered second-quarter results that were mostly consistent with analysts expectations. Revenue grew 27% year over year, which looks good on the surface but shows a deceleration over Q1 numbers, when revenue grew 33% in the first quarter. Nonetheless, the market for streaming is serving as a tailwind for CuriosityStream, which seemed to bolster investor enthusiasm, sending the stock up 21.1% at 11:28 a.m. EDT on Wednesday.

CURI

CURI data by YCharts

So what

What seemed to contribute to the stocks jump on Wednesday as much as anything was a positive outlook for streaming services in general. fuboTV (NYSE:FUBO) reported record results in Q2 amid a strong quarter for sports broadcasting. Streaming services are taking market share from legacy TV, which bodes well for long-term growth from these smaller players, including CuriosityStream.

In July, the company announced a partnership with Spiegel TV, positioning CuriosityStream for growth in Germany, its largest non-English-speaking market. The company also recently launched on Sonys PlayStation 4, which has an installed base of over 100 million monthly active users. 

A

Image source: Getty Images.

Now what

CuriosityStream grew subscribers 56% year over year in the recent quarter, and CEO Clint Stinchcomb suggested more growth is in store: New subscribers are joining our service at a rapid clip and the annual anniversaries for subscribers who signed up during the most significant periods of the Covid lockdown have passed. We have successfully navigated retaining those users better than anyone else in the industry.

The stock is down year to date, the decline stemming from concerns about how CuriosityStream would hold on to its newly acquired subscribers during the pandemic. The latest quarterly results have dampened those concerns for now. Stinchcomb noted that it retained a higher percentage of new users acquired in Q2 2020 than any other streaming service

Demand for CuriosityStreams factual entertainment offerings, which deal with history, nature, and technology, appears poised for further momentum in the near term. Management expects full-year revenue to be up 80% over 2020, reaching $71 million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

John Ballard has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CuriosityStream Inc. The Motley Fool recommends fuboTV, Inc. The Motley Fool has a disclosure policy.

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