To say that 2022 was a difficult one for growth tech stocks would be an understatement. Roku (ROKU -1.65%), a leading streaming platform business, saw its shares tank 82% last year amid general weakness in the equity markets and waning interest among investors for unprofitable enterprises. 

But there might be an opportunity here. As of this writing, Roku's stock is trading at a price-to-sales multiple of 2.7, which is significantly below its historical average of 11.3 and not too far off the all-time low of 1.7. Here's why Roku is a super-cheap turnaround stock to consider buying right now. 

Facing a slowdown 

During the fourth quarter, Roku's sales of $867.1 million were essentially flat with the same period in 2021. The net loss of $237.2 million was a huge reversal from the $23.7 million profit in the year-ago period. Nonetheless, Roku beat Wall Street analyst expectations with its latest financial release. 

For the full year, however, it was a bit of a better story. Roku's 2022 total revenue of $3.1 billion was up 13.1% year over year. And as of Dec. 31, active accounts, hours streamed, and average revenue per user (ARPU) were up 16%, 23%, and 2%, respectively, compared to the end of 2021. At a high level, these metrics point to Roku's ecosystem getting stronger, although growth has sharply decelerated in each quarter last year. 

The blame for slower growth can go to the current macroeconomic environment, in which advertisers are pulling back their spending. Some of the most dominant companies in the digital advertising space are also feeling the pain. Google parent Alphabet saw ad revenue decline 3.6% in its latest quarter, and Meta Platforms saw ad revenue drop 4.2%. 

Moreover, consumers are still facing heightened inflationary pressures. This could be both a good and a bad thing for Roku. On the one hand, they might be less inclined to pay for a Roku media player or smart TV. But on the other hand, these consumers might opt for the lower-cost ad-supported tiers offered by major streaming services, most recently Netflix and Walt Disney. Additionally, a possible recession could actually force consumers to spend more time at home in an effort to save money, and this could translate to more time spent watching streaming content. 

But the unfavorable financial situation currently facing the business further calls into question when, if ever, Roku can become a profitable company. For the seventh straight quarter, the business lost money from the sale of its hardware devices, generating a negative segment gross profit of $43.6 million in the last three months of 2022. Deciding not to pass higher input costs on to customers is a worthwhile strategy as long as Roku continues growing its user base, which it has been able to do. 

If the ad market remains under pressure, though, the company's ability to monetize its expanding number of active accounts will be limited. After all, we did see ARPU nearly flatline in the latest quarter. Making matters worse for Roku is its widening operating losses. The company's operating margin went from -3.2% in Q1 last year to -28.8% in the fourth quarter. 

Sizable opportunity 

Roku is dealing with some problems right now, but it isn't all bad news. It's hard to argue that the business isn't well positioned to benefit from the cord-cutting trend. According to eMarketer, there will be more households in the U.S. this year without a traditional cable TV subscription than with one. And according to data provided by Nielsen, streaming entertainment's leading share of TV viewing time is only rising in the U.S. with each passing month. This secular trend toward the more user-friendly streaming option is a tailwind that can lift Roku to new heights over the next decade. 

Another very compelling argument to be bullish on Roku is how much room there is for ad dollars to shift to connected TV (CTV). CTV ad spend of roughly $19 billion lags far behind the $68 billion spent on linear TV ads in 2022 in the U.S. As this gap closes, Roku stands to gain with improved monetization of its user base and higher revenue. 

Macroeconomic headwinds can certainly cause harm for many companies. But astute investors are able to assess whether the problems are temporary or more structural in nature. In Roku's case, once the economic picture improves, it's easy to see the business posting strong growth and thriving once again. This makes today's attractive valuation a potentially good opportunity to buy the stock in hopes for a turnaround.