What happened

Shares of streaming-TV platform Roku (ROKU 0.65%) are up sharply on Friday. As of 10 a.m. ET today, the stock had risen about 6%.

The stock's gain is likely being driven by optimism in the market on Friday for digital advertising stocks, following their beating on the prior trading day. Digital advertising stocks were dragged down yesterday after a disappointing quarter and weak guidance from Meta Platforms on Wednesday afternoon sent the Facebook company's shares plummeting.

But on Thursday, social media platform Snap reported results demonstrating a very different (and more optimistic) narrative. That sent its stock soaring today and gave a boost to many of the same advertising stocks that were hit hard the day before.

A chart showing a stock price rising sharply.

Image source: Getty Images.

So what

[Editor's note: The information in this paragraph has been corrected.] As Meta Platforms reported disappointing fourth-quarter results and provided weak guidance for the first quarter, Snapchat’s parent company did the opposite, reporting better-than-expected fourth-quarter results and guided for robust first-quarter revenue. 

Snap's strong results likely alleviated some concerns about the current state of the digital advertising market ahead of Roku's earnings report later this month. That helped Roku stock recover some of its recent losses. But shares are still down about 33% year to date.

Now what

Roku has scheduled its earnings report for Thursday, Feb 17. While its advertising business thrived throughout 2021, there have been some concerns about the tech company's slowing growth in active accounts and streaming hours. "We believe that the slowdown in active account growth rate this quarter was, in large part, attributable to global supply chain disruptions that have impacted the U.S. TV market," Roku said in its third-quarter shareholder letter.

Investors will likely be closely watching Roku's reported new account additions in the fourth quarter, along with commentary on its advertising business, when the company reports earnings after market close on Feb. 17.