North America's premier streaming TV platform, Roku (NASDAQ: NASDAQ:ROKU), is preparing to announce its Q3 financial results this week. This key development is expected to influence the company's stock performance, which has seen a 38% increase in 2023, despite a significant fall from its near $500 per share zenith in 2021.
The firm's ad-supported model has been struggling, with average revenue per user and platform revenue failing to keep pace with user growth. This issue has resulted in six straight quarters of losses, and a seventh is anticipated. The company's investments in content and product expansion have impacted near-term performance, with profitability not projected until 2027.
Adding to Roku's challenges is the ongoing Screen Actors Guild-American Federation of Television and Radio Artists strike, which could potentially disrupt the availability of fresh content next year. Despite these hurdles, Roku maintains its leadership position in the North American market. The company has expanded its share of new TVs sold with its operating system as default. Active accounts have grown by 16% over the past year to 73.5 million, and engagement has increased by 21%.
Revenue growth for Roku remains on track, with a 12% increase expected for Q3. Although immediate profitability is not anticipated, the company has reported narrower losses than expected in three out of the last four quarters. With shares currently more than 40% below their peak two months ago, even the absence of negative news could provide some relief for investors who recall the stock's previous highs.
InvestingPro Insights
In light of the upcoming Q3 financial results and the recent market performance of Roku, InvestingPro provides some key insights. According to InvestingPro data, Roku's market cap stands at $8330M USD with a negative P/E ratio of -12.45. The company's revenue for the last twelve months as of Q2 2023 is $3216.61M USD, marking a growth of 5.69%.
Two crucial InvestingPro Tips to take into account are that Roku holds more cash than debt on its balance sheet, which can be promising for future investments and growth. However, it's worth noting that the company's earnings per share have been on a declining trend. Additionally, the stock is currently in oversold territory, as indicated by the Relative Strength Index (RSI).
While Roku's recent performance has been volatile, with the stock taking a significant hit over the last week, these insights may be beneficial for investors looking to understand the company's current financial standing. Keep in mind that there are many more InvestingPro Tips available for Roku and other companies, which can provide a more comprehensive view of their financial health and market performance.
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