Please ensure Javascript is enabled for purposes of website accessibility

Is This an Overreaction to Roku's Earnings?

By Jose Najarro – Nov 8, 2021 at 10:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Roku's growth is being affected by supply chain problems.

Today's video focuses on Roku's (ROKU 6.48%) earnings, reported on Nov. 3, after the market closed, and why its stock price dropped. Here are some highlights from the video. 

  1. Roku reported third-quarter revenue of $680 million, up 51% year over year (YOY) and 5% quarter over quarter. The revenue growth was driven by its platform segment, which increased 82% YOY. Active accounts also increased and reached 56.4 million accounts, up 23% YOY.
  2. Unfortunately, supply chain issues have hurt Roku's growth. TV sales are below pre-COVID levels, which means fewer Roku TVs and less hardware is being sold, leading to slower growth of active accounts. Investors could be hopeful that Roku is expanding its TV footprint in Latin America later this year.
  3. Margins on hardware have decreased due to the increased cost of shipping logistics and components. Roku has no plans to increase its products' prices, as it is focused on grabbing as much market share as possible. Management believes that the decrease in margins will be temporary and is focused more on long-term user growth.

Click the video below for my full thoughts and analysis. 

*Stock prices used were the closed prices of Nov. 5, 2021. The video was published on Nov. 7, 2021.

 
 

Jose Najarro owns shares of Roku. The Motley Fool owns shares of and recommends Roku. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.