Streaming platform and hardware supplier Roku (NASDAQ: ROKU) has stock tumbled (-58%) for the full year and beyond (-70%) since it hit its all-time high of $490.76 on July 19, 2021. The leading US streaming player has continued with tailwinds. TV streaming devices surpassed legacy set-top and DVR boxes in the US for the first time, by 65% to 63%, respectively. Roku is a major enabler and benefactor of this stat as it continues to grow its distribution base. It’s The Roku Channel has grown into a top five channel on the platform. Although the growth rate has slipped from a year ago, the statistics are still strong. Supply Chain disruption, inflationary pressure and geopolitical conflicts all contributed to pressure on gross margins and TV set sales across the industry. TV sales fell below pre-COVID 2019 levels for the third straight quarter. This impacts Roku as a significant portion of licensing costs are derived from Roku integrated TVs. The company expects this headwind to continue in the short term, but may set the bar low for the future. Roku remains the leader in TV to stream and revenue was still growing 39% in the fiscal first quarter of 2022, adding 1.1 million new active accounts in the quarter to bring the total active account to 61.3 million users. Cautious Investors Waiting for a More Reasonable taxation on shares of Roku can look to opportunistic pullback levels to gain exposure.
Q1 Fiscal 2022 Profit Release
On April 28, 2022, Roku reported its fiscal results for the first quarter of 2022 for the quarter ended March 2022. The company reported a loss of earnings per share (-$0.19) against consensus analyst estimates for a loss of (-$0.21). , a stroke of $0.02. Revenues grew 27.8% year over year to $733.7 million, better than analysts’ estimates of $718.56 million. The platform’s revenue grew 39% year-over-year to $646.9 million. Player revenues declined (-19%) year-over-year to $86.8 million. Active accounts grew to 61.3 million, up 7.7 million year over year. Average revenue per user (ARPU) increased 34% year-over-year to $42.91.
The company lowered its forecast for Q2 2022 revenue to around $805 million, against $823.13 consensus estimates. Fiscal revenue for the full year 2022 is expected to grow 35% year-over-year to $3.73 billion, compared to consensus analyst estimates of $3.72 billion.
Takeaway for conference calls
Roku co-founder and CEO Anthony Wood noted that Q1 2022 revenue grew 39% year-over-year, driven by higher ad revenue and content distribution. He noted, “From day one, the Roku platform has been built to work at the center of TV streaming and meet the needs of every participant in the ecosystem. For consumers, we provide an excellent experience with trusted discovery tools that allow them to find and view content the way they want, whether through ad-supported or subscription services.” He noted that content owners benefit from the platform by helping to build and retain viewers while monetizing content.Ad-supported streaming is the most important part of the streaming ecosystem.This is underlined by the success of The Roku Channel, which has grown to become a top five app on its platform in the US for the third straight quarter, is also because a top five streaming engagement app in the US will see the company launch new offerings of advertising products and content for advertisers and will continue to invest to remain the leader in TV streaming.
ROKU Opportunistic Pullback Levels
Using the gun cards on the weekly and daily time frames provide an accurate picture of the landscape for ROKU stock. The weekly rifle peaked near the $117.39 Fibonacci (fib) level before plunging into the failed weekly stochastic low-band flush attempt. The weekly 5-period moving average (MA) resistance is slowing its descent to $99.20, followed by the weekly 15-period MA at $119, while weekly stochastic attempts are moving back up towards the 10 band. The higher cross-up this time creates a potential weekly divergence bottom if it can bounce through market structure layer (MSL) buy trigger level on breakout to $110.56. The 200-period weekly MA is steady at $177.69. The weekly upper Bollinger Band (BB) costs $251.85. The downward trend in the daily gun chart has stalled as the 5-period MA flattened out at $87.14, followed by the 15-period MA flattening at $94.30. The daily lower BBs are $71.71 and the higher daily BBs are $122.68. The daily stochastic tries to settle the 20 band. Cautious investors can watch for opportunistic pullback levels on the $86.39, $83.54 fib, $77.15 fib, $71.71 fib, $67.22, $61.12, $58.22 fib, $53.90 and the $46.39 fib level. Upward trajectories range from the fib level of $117.39 all the way to the fib level of $163.06.