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Sunday, July 3, 2022

Putting the Heat on ROKU Stock

Roku Inc. (NASDAQ: ROKU), a producer of video streaming software and devices, posted good first-quarter results, boosting investor confidence in the wake of Netflix’s disappointing earnings announcement.

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The statement from one of the industry leaders – Netflix – concerning the continuous drain of members caused investors to be pessimistic about streaming services. In the first quarter of this year, the corporation lost 200,000 users, with another 2 million predicted between April and June.

Some Wall Street experts interpreted this as a hint of a market slump. The Roku report, on the other hand, entirely refutes these notions. Roku’s revenue increased by 28% year over year in the first quarter, and management anticipates revenues to climb by 35% by the end of 2022.

Of course, Roku’s 28 percent growth is slower than it has been in the past. However, one must consider the terrible macroeconomic circumstances as well as the industry’s general sour mood. In the case of Roku, rising inflation puts consumers at danger of spending less. Despite this, the company’s main performance metrics have improved. The number of active accounts increased by almost 1 million to 61.3 million, a 14 percent increase over the previous year.

Roku customers viewed 20.9 hours in the first three months of the year, a 14 percent increase in engagement as measured by hours watched on the platform. a billion hours of video But, most crucially, the company’s monetization continues to increase, rising 34% year over year to $42.91 in the first quarter.

This is most likely due to the platform’s variety of content providers, which gives members greater choice to pick what they want to watch. The positive rise in the first quarter despite unfavorable trends shows that Roku still has the opportunity to boost advertising income as people switch from traditional cable to streaming.

ROKU has a year-to-date performance of -54.45%. The stock’s price has risen 13.28 percent in the last week and -17.21 percent in the last month, according to the 7-day charts.

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