The stock of the streaming platform and hardware provider is having a poor year. The Company went from six consecutive quarters of triple-digit growth and record profits to mounting losses and slowing growth in dramatic fashion as its shares crashed to a low of $62 a year later. The company has over 60 million subscribers on its streaming platform, which can be accessed through a streaming device or smart TV. Viewers can watch streaming content on their TVs with the help of the largest streaming platform. The difference between streaming services and networks that provide content is important. The decline in TV advertising spend will continue to put pressure on the company's business. Inflationary pressures and the macro- economic environment have caused consumers to moderate discretionary spending and advertisers to reduce spending in the ad scatter market in the second half of the year. Air leaking out of a balloon is what the normalized levels are like. Losses are growing larger than revenues. They missed their Q2 earnings by $0.09, as well as their revenue targets by$40 million, prompting them to withdraw their previous full-year revenue growth estimate. Needless to say, that sent shares crumbling after earnings only to regain its losses on a rebound but return back to those levels with the overall market sell off. - MarketBeat

Advertising Demand Shock

This demand shock from the sudden withdrawal of ad spending was also echoed in earnings misses by Meta Platforms and other companies. According to a survey by Advertiser Perceptions, 47% of advertisers in the U.S. admit to pausing their ad spending in the third quarter. It's similar to the environment at the beginning of the 2020 epidemic. All of the major agency holding companies made upfront commitments to the tune of $1 billion. The Company launched Shoppable Ads, which is an interactive option that allows users to purchase items by pressing "OK" on their Roku remote and then proceed to checkout with shipping and payment information provided through their Roku accounts.

Reality Bites Roku

The company reported its results for the second quarter of fiscal year 2022. The Company had an earnings-per-share loss of (-$0.82) and missed analyst estimates for a loss of (-$0.68) Revenues grew by 18.4%, but missed analyst estimates. The platform's revenues went up 26%. The player revenues fell. The number of active accounts increased by 1.7 million. The gross profits increased to $355 million. The number of hours streamed fell from the previous quarter.

It Doesn’t Get Better

The Company lowered its revenue guidance for the third quarter of 2022. The total profits are expected to be $325 million.

Roku Stock is Down but Not Out

ROKU Opportunistic Pullback Levels

The rifle charts give a precise view of the landscape for ROKU stock. The weekly rifle peaked at the $117.39fib level before plunging on the failed weekly low band coil attempt. The weekly 5-period moving average resistance is slowing its descent at $99.20 followed by the weekly 15-period MA at $119 as the weekly stochastic tries to cross up at the 10-band. If the market structure low is broken through $110.56, the weekly divergence bottom will be set up. The weekly 200 period MA is not moving. The weekly upper band is called theBB The daily 5-period MA is at $87.14 and the 15-period MA is at $94.30. The upper and lower dailyBBs are at $122.68 and $71.21, respectively. The 20-band is being attempted to coil off. Prudent investors can keep an eye on the $86.39, $83.54 fib, $77.15 fib, $71.71 fib, $67.22, $61.12, $58.22 fib, and the $46.39 fib level. The trajectory starts at the $117.39fib level and goes up to the $163.06fib level.

ROKU Takeover Speculation (Again)

Every few months, there is a new takeover rumor for the company. There was a rumor in June that was true. In the event of a change in control, the company filed an 8-K that amended the terms of the severance benefits. This is standard language, but speculators took it to be a sign of an impending takeover since co- founder Anthony Wood still holds a large amount of Class B shares.

ROKU The Silver Lining?

All the streaming services and social networks are affected by the decline in ad spending. If everyone is affected, investors will improve their performance. While the legacy hardware player business continues to shrink, the platform business is still showing growth. The stock is not completely knocked out if the platform business continues to grow. The cutting the cord trend will continue to drive more eyeballs to streaming channels and away from legacy pay TV. Local news is offered by NBCUniversal. Any hint of improvement in ad spend coming from any of the streaming services, platforms or social networks can help the stock. It is possible for an acquisition if CEO Wood is onboard.

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