![]() Having said all of this, don’t get me wrong. The stock could even keep sliding lower, as investor patience keeps wearing thin due to continued losses. The VerdictĪs Roku’s profitability challenges persist, shares will, at the very least, languish at or near present levels. Yes, this may represent big improvement from the expected $5.17 per share in losses this year, staying in the red will make it difficult for ROKU to grow, or even sustain, its valuation. And those estimates already factor in the aforementioned expected revenue growth. Per the sell-side’s estimates losses per share are expected to come in at $3.04 and $1.86, respectively, during 20. That is, if we assume that Roku fails to deliver earnings results in the coming years that are above and beyond current forecasts. Yet while revenue growth could be back into the fast within a few quarters, don’t assume that this alone will save the day. Roku is also at work improving the monetization of its platform, as measured by revenue per user. Not only is the company continuing to grow its user base. More-or-less, I agree that Roku’s growth isn’t likely to stay flatlined for long. Once economic conditions normalize, the company’s revenue growth will get back well into the double-digits. Sure, investors bullish on ROKU stock will counter that current growth headwinds are likely temporary. Worse yet, Roku’s quarterly net losses have ballooned seven-fold year-over-year, with little indication that they will narrow/swing back to positive anytime soon. However, revenue growth during this same period came in at only 1%. Last quarter, active users grew by 17% compared to the prior year’s quarter. Macroeconomic changes have not affected Roku from growing its ad-supported streaming platform. This has really dampened bullishness for the stock. Still, what has really put pressure on shares over the past two months, and is currently holding them down, is Roku’s poor fiscal performance. Sure, more macro factors such as interest rates are playing a role.Īs the Federal Reserve remains steadfast in its efforts to bring down inflation, hopes of “Fed pivot” on interest rates in 2023 have been dashed. ROKU stock is still up by more than 33% year-to-date, but in more recent months shares have slid back. Starting off the year at around $40 per share, in mid-February it made a brief return to prices north of $70 per share. After plunging during 2022, ROKU kicked off 2023 with a rapid move back to higher price levels.
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