{"id":1106,"date":"2022-12-27T11:07:33","date_gmt":"2022-12-27T11:07:33","guid":{"rendered":"https:\/\/tradersontrend.com\/?p=1106"},"modified":"2022-12-27T11:07:33","modified_gmt":"2022-12-27T11:07:33","slug":"roku-is-sliding-deeper-into-a-catastrophe","status":"publish","type":"post","link":"https:\/\/tradersontrend.com\/h\/2022\/12\/27\/roku-is-sliding-deeper-into-a-catastrophe\/","title":{"rendered":"Roku is Sliding Deeper Into a Catastrophe"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1106\" class=\"elementor elementor-1106\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-5cd2ffe6 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5cd2ffe6\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2e502ee1\" data-id=\"2e502ee1\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-5a356b26 elementor-widget elementor-widget-text-editor\" data-id=\"5a356b26\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.21.0 - 26-05-2024 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<p>Bears on Roku (NASDAQ: ROKU) have been persistent in their attacks on the company&#8217;s stock over the last year.<br \/><br \/>After a brief respite following the announcement of its Q3 earnings, the bears have resumed their assault.<\/p><p>As a result, ROKU has dropped roughly 25% since our last piece, trailing the <a href=\"https:\/\/www.google.com\/finance\/quote\/.INX:INDEXSP?hl=en\">S&amp;P 500<\/a>&#8216;s 4% decrease but it isn&#8217;t all. <br \/><br \/>ROKU has also plunged far below its COVID lows, thus erasing nearly three years of gains and more. <br \/><br \/>As a result, ROKU&#8217;s YTD drop of more than 80% and over 92% from its 2021 highs is nothing short of a slaughter and a colossal failure.<\/p><p>We acknowledge that our ROKU thesis did not play out as planned, since it was mercilessly torn apart by the bears. <br \/><br \/>We expected ROKU buyers to play ball in order to prevent further declines, but buyers have continued to fall by the wayside as bears refused to enable the bulls to make a prolonged comeback.<\/p><p>As a result, those that remain are likely to be the diamond hands who still feel that <a href=\"https:\/\/en.wikipedia.org\/wiki\/Anthony_Wood_(businessman)\">CEO Anthony Wood<\/a> and his staff will pull off a miraculous turnaround in 2023. However, with its adjusted EBITDA not expected to be profitable until 2023, it is likely to be a popular target for short sellers, as short interest as a percentage of float has risen to 8.6% but could these bears be pushed to flee quickly? Unlikely.<br \/><br \/><strong style=\"font-size: 24.5px; font-family: inherit;\">Ad Spending Is Likely to be Low, and Roku May Lose Market Share<br \/><br \/><\/strong><span style=\"font-family: inherit;\">Why? The digital advertising market may remain stagnant in 2023, as corporations continue to slash ad expenditure in response to a deteriorating economy. <br \/><br \/>With a recession on the horizon, underperforming enterprises like ROKU are unlikely to escape undamaged unless they commit to considerable cost-cutting efforts to reduce OpEx.<\/span><\/p><p>While management stated on its last earnings call that it will be more disciplined with its OpEx cadence by focusing on &#8220;high potential projects,&#8221; we feel the market is expecting more. <br \/><br \/>However, we believe that the company&#8217;s desperate need to maintain its market share may mean that its hands are bound as competition in the CTV streaming arena heats up.<\/p><p>In a recent analysis, KeyBanc Capital Markets stated that Roku&#8217;s issues go &#8220;beyond economic malaise.&#8221; It emphasized that Roku was hurt harder than competitors, saying that &#8220;<em>the discrepancy in Roku&#8217;s growth vs. peers signals share loss.<\/em>&#8220;<\/p><p>Is this correct? We can&#8217;t ignore The Trade Desk&#8217;s (TTD) considerable gains in Connected TV (CTV) as the top independent demand-side platform (DSP). <br \/><br \/>So, something appears to be wrong with Roku&#8217;s problems, as its rapid expansion has slowed.<\/p><p>According to recent eMarketer predictions, Roku will likely lose market share in the CTV arena in 2023, dropping to 9.5% (from an expected 10.1%) in 2022. <br \/><br \/>Despite the fact that Hulu and other competitors are also anticipated to lose market share, their businesses are profitable. <br \/><br \/>As a result, even though its latest incursion has met with some early missteps, Netflix (<a href=\"https:\/\/www.google.com\/finance\/quote\/NFLX:NASDAQ?hl=en\">NFLX<\/a>) is projected to capture a share in the CTV area.<br \/><br \/><strong style=\"font-size: 24.5px; font-family: inherit;\">A Severe Recession Could Exacerbate Roku&#8217;s Problems in 2023.<br \/><br \/><\/strong><span style=\"font-family: inherit;\">As a result, we believe the market&#8217;s continued thrashing of ROKU could signal that the company may need to continue pouring in investments to maintain its market dominance, even if it means expanding its unprofitable cycle.<\/span><\/p><p>Elon Musk, CEO of Tesla (<a href=\"https:\/\/www.google.com\/finance\/quote\/TSLA:NASDAQ?hl=en\">TSLA<\/a>), warned investors that we could be in a severe recession in 2023, affecting discretionary spending much more. <br \/><br \/>As a result, ad expenditure could be reduced even further, affecting Roku&#8217;s estimates even further.<\/p><p>As a result, the market has most certainly priced in a considerably lower Q4 card, implying that Roku may miss its previous guidance.<br \/><br \/><strong style=\"font-size: 24.5px; font-family: inherit;\">Takeaway<br \/><br \/><\/strong><span style=\"font-family: inherit;\">So, the question is, should investors bail out now? <br \/><br \/>If you haven&#8217;t fled yet, you are most certainly among the unenviable group of diamond hands who anticipate Wood to lead the company to a profitable comeback in the medium future.<\/span><\/p><p>Otherwise, given the tech and growth bear markets, it may be preferable to take the fall and move on to another opportunity in a year rife with them.<\/p><p>However, remember that ROKU&#8217;s valuation has plummeted as the bears piled on their wagers. <br \/><br \/>With such widespread pessimism, a rebound cannot be ruled out, which is why a <strong>Buy recommendation<\/strong> is maintained.<\/p><p><em>For More Stocks And Investment Related News, Click\u00a0<a href=\"https:\/\/tradersontrend.com\/\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/tradersontrend.com\/&amp;source=gmail&amp;ust=1672217904143000&amp;usg=AOvVaw2_j7MT-Lv2wQmvrjhxG9Hc\">Here<\/a>.<\/em><\/p><p>\u00a0<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Bears on Roku (NASDAQ: ROKU) have been persistent in their attacks on the company&#8217;s stock over the last year. After a brief respite following the announcement of its Q3 earnings, the bears have resumed their assault. As a result, ROKU has dropped roughly 25% since our last piece, trailing the S&amp;P 500&#8216;s 4% decrease but&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1107,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[37,369,513],"class_list":["post-1106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsletter","tag-anthony-wood","tag-low-market","tag-roku"],"_links":{"self":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/1106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/comments?post=1106"}],"version-history":[{"count":0,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/posts\/1106\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media\/1107"}],"wp:attachment":[{"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/media?parent=1106"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/categories?post=1106"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradersontrend.com\/h\/wp-json\/wp\/v2\/tags?post=1106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}