What happened
Roku (ROKU 1.91%) shareholders lost ground to the market early Monday as the stock shed 3% by 11:15 a.m ET, compared to a 0.7% decline in the S&P 500. That drop added to a long string of losses for the streaming video platform stock, which is down over 75% so far in 2022.
It came as investors worried about potentially bad news on the way in the streaming industry.
So what
Rival Netflix (NFLX -0.51%) is set to announce its Q3 results in just a few days, on Oct. 18. That report carries a few risks for Roku stock, led by the potential for the streaming video leader to issue a bearish short-term outlook. Back in July, co-CEO Reed Hastings and his team predicted that Netflix would return to user growth in the current quarter. However, the intervening period brought more pressure to consumers' wallets thanks to inflation.
Netflix is also making a big push into the advertising business, and its uniquely global user base could attract a few major advertisers away from Roku. We'll get a key update on that strategic push during Netflix's earnings update. These concerns have been pressuring the stock, along with worries about slowing growth and net losses.
Now what
Investors won't have to wait long for more clarity about the business. Following Netflix's earnings update in mid-October, Roku will announce its own results, likely by early November. That report will show whether management has been able to fix the slide toward losses in 2022. Netflix appears to have a clearer path toward steady earnings growth, and it is already generating positive annual cash flows that should improve over the next few years.
If Roku can make similar progress, the streaming video stock will likely recover some of its lost ground. Yet for now, most investors are worried that operating trends will get worse before they get better.
