Roku Stock News and Forecast: ROKU earnings lead to bloodbath
- ROKU plunges 27% in Friday premarket despite upbeat EPS numbers.
- Roku stock dropped 10% on Thursday on broadband stock market sell-off.
- Wall Street expected $893 million in Q4 revenue, but the hardware company reported $865 million.
Roku (ROKU) shares plunged as much as 27% in Friday's premarket after earnings and guidance startled the market. Roku already closed down 10% on Thursday before the massive afterhours plunge.
Roku Stock News: Guiding Q1 lower
Yikes! The market did not like Roku missing consensus forecasts by $28 million in revenue. Even more so, it did not like management guiding Q1 net revenue to $720 million. This is well below the Wall Street forecast of $749 million.
It did not seem to matter that Roku heavily surpassed earnings per share expectations of $0.06 with $0.17 reported. Nor did it matter that forecasts of 59.5 million activ accounts was surpassed by 600,000. Worries over the situation in Ukraine likely added to the tumult, and the market was not in the mood for any good information.
Management blamed issues with current global chip shortages and increased prices for freight for its slowdown in Q1. It said it would not pass on higher costs to customers since it is focused on user growth.
"It looks like two important problems have persisted for Roku," said Tom Forte, a managing director at D.A. Davidson, in an interview with Yahoo. "One, the negative impact on TV units being available from a supply chain standpoint. And number two, advertisers who have their own issues with supply chain scaling back their digital advertising spend."
ROKU key statistics
| Market Cap | $19 billion |
| Price/Earnings | 76 |
| Price/Sales | 7 |
| Price/Book | 7 |
| Enterprise Value | $17 billion |
| Operating Margin | 11% |
| Profit Margin |
11% |
| 52-week high | $490.76 |
| 52-week low | $139.47 |
| Short Interest | 5% |
| Average Wall Street Rating and Price Target | Buy, $312.64 |
Roku Stock Forecast: Technical analysis draws $101 key support
ROKU stock has had one of the most spectacular falls of the Covid-19 stock bubble era. On July 27, 2021, ROKU traded up to an eye-popping $490.76. When it opens on Friday, ROKU will most likely trade near $105, its price in the premarket at the time of writing. That is a 79% decline.
Those still holding this streaming maven can expect some support at $101, which acted as support back in June 2020. In fact, $101 to $104 offers plenty of historical volume. Below here is less support at $80. This one will have few takers until it makes it above $178. From there, the target is $272.41, which should serve as major resistance.
ROKU 1-day chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
