Roku Stock is Not Down and Out Yet.

Roku stock NASDAQ:ROKU

To say Roku stock (NASDAQ:ROKU) has had a horrible year would be an understatement. Roku stock (NASDAQ:ROKU) reached a high of $490.76 at the end of July 2021 before plummeting to a low of $62 a year later.

Roku is one of the most popular streaming systems, allowing users to watch streaming content on their televisions.

What Happened to Roku Stock?

The abrupt withdrawal of ad expenditure resulted in earnings disappointments by Meta Platforms (NASDAQ:META), Snap (NASDAQ:SNAP), and even Alphabet. According to Advertiser Perceptions, 47% of marketers in the United States confessed to pausing ad expenditure on TV streaming, 44% on digital video, and 42% on traditional pay TV throughout the quarter. It’s eerily similar to the situation at the outset of the 2020 pandemic. On the other hand, Roku exceeded $1 billion in upfront pledges from all seven big agency-holding corporations.

Roku Gets Bit by Reality

Roku released its fiscal Q2 2022 earnings for the quarter ending June 2022 on July 28, 2022. The company posted a loss of (-$0.82) per share versus average analyst projections of (-$0.68), a (-$0.14) shortfall. Revenues increased 18.4% year on year to $764 million, falling short of analyst expectations of $804.64 million. Platform sales climbed 26% year on year to $673 million. Revenue from players declined (-19%) year on year to $91.2 million. Active accounts increased by 1.8 million years on year to 63.1 million. The average revenue per user (ARPU) increased 21% year on year to $44.10. Gross earnings increased 5% year on year to $355 million. Streaming hours decreased by 0.2 billion hours in the previous quarter to 20.7 billion hours.

Speculation of a Roku Takeover (Again)

Every few months, a new Roku takeover rumor surfaces. In June, it was reported that Netflix was contemplating acquiring Roku. Roku stock (NASDAQ:ROKU) recently surged again on expectations of an approaching takeover fueled by an 8-K filing altering severance payments in the event of a change in management. This is fairly conventional phrasing, but speculators saw it as an indication of an approaching purchase since co-founder Anthony Wood controls 59% of voting power via Class B shares.

Roku Stock: The Silver Lining?

The decline in digital advertising investment affects all streaming services and social networks. Investors will ultimately exaggerate accomplishments that distinguish superior performance if everyone is impacted. The Roku Channel is still growing, so the stock isn’t entirely sunk. The Roku Channel was once again a top five channel on its platform in the United States. Cutting the cord is still a trend that will drive more people to streaming channels and away from traditional pay TV. The Roku channel has partnered with NBCUniversal to provide local news. Roku stock (NASDAQ:ROKU) may rebound if there is any indication of an increase in ad expenditure from any of the streaming services, platforms, or social networks. If CEO Wood is on board, there is always the possibility of an acquisition.

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About the author: Okoro Chinedu is a freelance writer specializing in health and finance, with a keen interest in cryptocurrency and blockchain technology. He has worked in content creation and digital journalism. Since 2019, he has written on various online platforms, and his work has been recognized by several important media sources and specialists in finance and crypto. In addition to writing, Chinedu enjoys reading, playing football, posing as a medical student, and traveling.