What happened
Media-streaming technology expert Roku (ROKU 1.91%) is scheduled to report fourth-quarter results after today's closing bell. The stock is surging higher ahead of the holiday-season business update because investors found encouragement from a robust report elsewhere in the digital media and advertising sector. The stock started climbing early in the morning and continued trending upward until press time; share prices were up by 12% at 2:39 p.m. ET.
So what
Online marketing campaign optimizer The Trade Desk (TTD 0.85%) reported fourth-quarter results on Wednesday morning, beating Wall Street's expectations across the board and setting revenue guidance for the next quarter well above the current Street view. The Trade Desk's stock had gained 26% at the time of writing. The Trade Desk's management also talked about improving market trends in the digital advertising sector, driven by old-school ad buyers taking their budgets online instead.
That's excellent news for Roku, whose stock price was decimated in recent quarters as investors worried about its ad-based revenues. If The Trade Desk's bullish market analysis applies to the rest of the online marketing sector, Roku should also have good news to share after the closing bell today.
Now what
Roku's guidance for the fourth quarter points to net revenue of approximately $800 million, gross profit near $325 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $135 million. Management arrived at these targets amid heavy pressure from the raging inflation of 2022.
You could also measure the report against Wall Street's consensus estimates, pointing to a net loss of roughly $1.72 per share on top-line sales in the neighborhood of $810 million.
Whether Roku meets, beats, or misses these targets today, the report will probably move stock prices dramatically tomorrow. The Trade Desk's tea leaves suggest good news, but we won't really know until the cards are on the table.
Either way, I expect Roku to grow dramatically in the long run even if it hits the occasional short-term speed bump along the way. The stock price is still down 60% over the last year, so it's not too late to lock in a great price on this incredible long-term growth stock.
Now, let's see what the fourth quarter looks like. Somebody, please pass me some popcorn and an accordion.
