UPDATED: Shares of FuboTV took another steep dive Thursday after a team of Wall Street analysts initiated coverage of the internet pay-TV company with a “sell” rating and said its recent stock price run-up was “just plain egregious.”

FuboTV shares closed down 16% in holiday-shortened trading Dec. 24, to $44.18 per share. That came after LightShed Partners analysts pegged an $8 per share price target on the stock. The stock had closed at an all-time high of $62 per share on Tuesday on investor enthusiasm about FuboTV’s prospects for market share gains and potential to grow sports-betting and ad revenue, spurred by a positive research note from Needham & Co. analyst Laura Martin, who doubled her price target on the stock from $30 to $60 per share.

“Fubo may be the most compelling short we have ever identified in our career as analysts,” LightShed analysts Rich Greenfield, Brandon Ross and Mark Kelley wrote in their coverage-initiation note. “Over the past few months, we have seen numerous examples of companies with valuations that defy logic. We understand the broader market dynamics at play with ‘cheap money’ and an exuberant retail investor. However, the run-up in Fubo shares is just plain egregious, in our view.”

FuboTV’s Christmas Eve slide came on the heels of a 15% drop Wednesday after BMO Capital Markets analyst Dan Salmon cut his rating from “outperform” to “market perform” on the company’s high valuation, although he actually raised his price target on the stock and is optimistic about FuboTV’s growth prospects.

FuboTV is vying against much bigger competitors — including YouTube TV, Hulu and Dish’s Sling TV — fighting for share as the overall pay-television sector shrinks. FuboTV went public in October after merging with FaceBank Group, a tech company that created digital likenesses of celebrities and sports stars.

FuboTV reported 455,000 paid subscribers at the end of the third quarter of 2020 (up 58% year-over-year), posting revenue of $61 million, an operating loss of $302 million and a net loss of $274 million for Q3. The third-quarter results included $236.7 million in impairment charges for the legacy Facebank reporting unit with the resignation from the company of Facebank’s former CEO, John Textor (whose exit “represents a triggering event to assess the carrying value of [legacy Facebank’s] goodwill and intangible assets,” FuboTV said in its most recent 10-Q filing.)

“To be honest, prior to the Facebank transaction earlier this year, we were not sure Fubo would even survive 2020 as it was unable to raise capital given the lack of investor confidence in the vMPVD [virtual multichannel programming video distributor] unit economics/business model,” the LightShed analysts wrote.

While FuboTV may pick up some share of the estimated 66 million U.S. households that subscribe to cable or satellite TV, “that’s where the good news ends,” the LightShed team wrote, noting that the pay-TV sector overall is down 5%-6% in 2020 year over year: “This is a secular trend, not a one-year phenomenon.”

The FuboTV service simply isn’t differentiated from competitors, the LightShed analysts argued. The service’s entry-level plan costs $65 per month after a rate hike this summer, which is in line with YouTube TV and Hulu With Live TV. Meanwhile, FuboTV this year dropped Sinclair-owned Fox regional sports networks and WarnerMedia’s Turner networks to add the Disney/ESPN family of networks.

Fubo’s standalone video business “is simply not very profitable,” the LightShed team continued, and they expressed skepticism of the upside TV advertising revenue and sports wagering. FuboTV currently generates $7 in monthly ad revenue per subscriber; in a best-case scenario, that could reach $17 by 2025, LightShed predicted, which would be less than the $20-plus that bullish investors have forecast.

Meanwhile, “Fubo has yet to explain how they plan to make money from sports betting beyond [that] they have a substantial number of sports fans that subscribe to their vMPVD service,” they wrote, pointing out that many states have not legalized gambling.

“Unfortunately, Fubo has evolved from what was a truly unique product to more of a me-too product that is largely undifferentiated from its peers beyond a few regional sports networks in markets like NY or Boston,” the LightShed analysts concluded.

BMO’s Salmon, on the other hand, remains fairly bullish on FuboTV. The analyst raised his price target on FuboTV (from $33 to $50 per share), implying the stock is worth 10.3 times estimated 2022 EV/revenue and 38.1 times 2022E EV/gross profit.

“We think Fubo continues to offer a more promising path to profitability than most new investors expect,” Salmon wrote.

With FuboTV’s acquisition this month of startup Balto Sports, a developer of sports-fantasy gaming tools, “we expect Fubo to roll out free-to-play gaming in 2021 and we anticipate more announcements in the coming months,” according to Salmon. “Management is taking a deliberate approach toward expansion and we view its multiphase approach as prudent.”