This is a big and potentially scary week for Roku (ROKU -0.74%) investors -- like me. The streaming TV pioneer reports fresh financials on Wednesday afternoon. 

The bar is set pretty low. This pole vault turned into a limbo competition this summer when Roku warned that it was modeling just $700 million in revenue for the quarter it will peel back later this week. This would translate into a 3% year-over-year increase and a crushing 8% sequential decline. Both of those timeline perspectives are problematic. 

Two people on a couch watching something scary.

Image source: Getty Images.

A tale of two pities

If you go with the dip from the $764.4 million it served up in the second quarter of this year, it would be the first sequential slide of any kind between those two quarters in Roku's first five years as a public company. The only real seasonality at Roku comes in the fourth quarter when its top line is padded by a margin-crushing spike in holiday hardware sales. The more important platform revenue has been a steady drum at Roku. It's about to skip a beat. 

Look at the longer year-over-year line and the 3% uptick is worse than you think. Roku's active user base has grown 14% to a record 63.1 million for the 12 months ending in June. Average revenue per user -- stacked on top of that increasing audience count -- has soared 21% over the past year through the end of the second quarter. Both of those metrics have consistently grown sequentially and year over year. With the meager 3% move higher that won't even keep pace with inflation, you're talking about one if not both of those metrics declining for the first time. 

With the economy's stomach starting to grumble, advertisers starting to pull back on their fishing expeditions, and supply chains rattling with their disruptions it's easy to see why everyone is bracing for a rough quarter shortly after the market close on Wednesday. It's also worth noting that Roku's guidance came in late July. So much has gone on to deteriorate in the past three months and change. Investors could be looking at numbers that are worse than what Roku was seeing at the time. 

Grate expectations

Things look pretty bad, but this could also be peak pessimism. The stock is nearly 90% below the all-time high it hit two summers ago. Grim box office receipts at local multiplexes suggest that people have been consuming a lot of entertainment at home as the economy starts to wobble. Usage numbers for Roku should be decent.

Ad revenue will likely be soft, but let's not paint Roku here in the same light as other advertising-supported business models. Roku's marketing missives are largely the sponsored pitches from the media companies behind the thousands of apps you can add to your hub. They're all still trying to get noticed. There have also been some big moves from Walt Disney, Netflix, and Alphabet's YouTube that should help Roku. Prices for the current ad-free Disney+ will go up 38% in December as it introduces an ad-based model. Netflix is rolling out its first ad-backed tier this month. Google is raising prices for YouTube Premium family plans by 28% in three weeks. These are deep-pocketed giants that will have to promote their new offerings. Anyone else looking to avoid the inevitable shakeout will also want to get their services in front of the eyes of Roku's more than 63 million homes. 

Will the third quarter be bad? Sure. Will the guidance for the balance of the year -- that it suspended back in July -- be potentially pleasant? Possibly, especially with the price at a historic low with its price-to-revenue multiple. Roku remains a bellwether for streaming video stocks, a niche still gaining market share at the expense of legacy TV consumption. Roku stock is clearly down, but it doesn't seem out. A scary report can still be beautiful.