What happened

Shares of Roku (ROKU 0.81%) fell 64% in the first half of 2022, according to data from S&P Global Market Intelligence. The media-streaming technology expert's stock was tangled up in Wall Street's general retreat from high-flying growth stocks, accelerated by an underwhelming fourth-quarter earnings report.

So what

Roku reported disappointing fourth-quarter results in February, and the stock closed 22.3% lower the next day. In that business update, quarterly revenues rose by 33% year over year with large increases in customer counts, hours of viewer engagement, and gross profits. However, your average analyst was looking for 38% top-line growth and stronger profits.

That was the sharpest drop in a long string of volatile market gyrations. Many investors felt that richly valued growth stocks like Roku were overdue for a price correction in early 2022, due to galloping inflation metrics and lower consumer confidence in the economy.

And Roku's business actually has a tight connection to those scary inflation figures. At a time when many consumer-facing businesses are raising prices in order to protect their profits from rising operating expenses, Roku prefers to take the brunt of those higher costs instead. That's a customer-friendly approach that should result in deeper consumer loyalty and faster user growth over time, but at the cost of lower profits in the short term.

Now what

Roku's downtrend actually started last summer as the stock chart peaked in July 2021. At the start of 2022, the stock had taken a 54% haircut but was still richly valued at 133 times adjusted earnings and 11.7 times sales. Today, Roku shares are trading 82% below those lofty all-time highs at 90 times earnings and 4.2 times sales.

To be clear, that's still far from deep-discount value territory. However, Roku is still a high-octane growth stock that derives its market value from short-term growth rates and long-term market prospects. The company holds a market-leading position in a streaming sector that will deliver tremendous global growth for years to come. Roku is also widening its horizons with original content production, an on-screen shopping service in partnership with Walmart (WMT 0.37%), international growth ambitions, and an evolving advertising operation. Against that backdrop, I see a fantastic buying opportunity even if the valuation ratios still look pricey.

Sometimes you get what you pay for, and this company is going places in the long run.