Roku Stock Is Down 85% From Its High. Time to Buy?
Share prices of Roku (NASDAQ: ROKU) fell hard last year as investors grew concerned about slowing growth in revenue and mounting losses on the company's bottom line. Despite another weak earnings report for the fourth quarter, however, Roku is starting to show signs that it is turning the corner, including positive trends taking shape with sales of Roku TVs.
Investors are certainly taking notice of a potential turnaround in the near term, with one former bear on Wall Street recently upgrading the stock to a buy. The stock has rebounded 67% year to date, although it is still down 85% from its all-time high. With catalysts starting to emerge for a turnaround in growth, the stock has more room to run.
Two problems for Roku have been supply shortages of TVs and higher TV prices, and tightening spending by advertisers. While Roku generates the bulk of its revenue from advertising, it still relies on a healthy TV market and sales of Roku player devices to get users to sign up on its platform. Platform revenue, including ads, grew just 5% year over year in the fourth quarter, while devices revenue fell 18% over the year-ago quarter. These are much weaker numbers than the double-digit rate of growth investors were used to seeing a few years ago.
Source Fool.com
