Roku saw its user base growth rate rebound and total revenue soar well ahead of Wall Street expectations in the third quarter, but investors nevertheless are hammering the stock due to other, less auspicious trends
provider was mixed for the near term, reflecting the broader anxiety among all digital ad sellers who have suddenly been hit with a pullback by buyers. YouTube last week reported the first year-to-year decline in ad revenue in its history, and the numbers have been soft across the rest of the tech sector.
Roku predicted a decline in platform and player revenue in the holiday-season fourth quarter. “As we enter the holiday season, we expect the macro environment to further pressure consumer discretionary spend and degradebudgets, especially in the TV scatter market,” the company said in its quarterly letter to shareholders. “We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or rebound.
Advertising spending in general “continues to grow more slowly than our beginning-of-year forecast due to current weakness in the overall TV ad market and the ad scatter market in particular,” the shareholder letter said. “However, the long-term opportunity in TV streaming remains intact, and we continue to innovate and execute.
Roku stock, a pandemic darling on Wall Street that touched $486 just last year, is now worth about 10% of that and has lost more than two-thirds of its value since the start of 2022.
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