What happened
Roku (ROKU +3.86%) shareholders lost ground to the market through Thursday trading, with the stock falling 6% compared to a 0.4% increase in the S&P 500 over that time, according to data provided by S&P Global Market Intelligence. Those losses were driven by fears that the streaming video specialist would issue a downbeat forecast on its business, as rival Netflix did in its recent announcement.
Yet the stock drop seemed set to reverse on Friday, as investors were pleased with Roku's fiscal first-quarter earnings report.
Image source: Getty Images.
So what
Roku said late Thursday that sales jumped 28% in the selling period that ran through late March. Streaming engagement metrics were strong, with user additions landing at 1.1 million and streaming hours rising by 1.4 billion to reach 20.9 billion.
The advertising business is having no trouble monetizing that engagement, as average revenue per user jumped 34% during the quarter. "Our first quarter performance was solid," executives said in a letter to shareholders that highlighted Roku's growing influence as a streaming content platform.
NASDAQ: ROKU
Key Data Points
Now what
Roku's stock jumped in after-hours trading immediately following the announcement. Besides the robust advertising revenue, investors were pleased to hear Roku's bullish outlook for the rest of 2022. Despite new headwinds like the war in Ukraine and weaker consumer spending on new TVs, management affirmed its outlook calling for sales to rise by 35% this year.
Much of that growth will come in the second half of 2022, meaning investors will have to watch the next few earnings reports for evidence of accelerating engagement and advertising spending. But Roku's steady outlook might still be enough to support a stock price rebound, given that shares remain lower by nearly 60% so far in 2022.
