What happened
Shares of streaming TV platform company Roku (ROKU 0.58%) have had a great year, crushing both the S&P 500 and the Nasdaq Composite. The stock rose 57.1% during the first half of the year, according to data provided by S&P Global Market Intelligence. But a big boost in July has taken the stock's total return in 2023 to more than 87% as of this writing.
The stock has benefited from a number of factors, including strong momentum in tech stocks overall, a rebound in the stock after a huge sell-off last year, the launch of Roku-branded TVs, and a series of important advertising partnerships.
So what
Capturing the market's hype for tech stocks, the tech-heavy Nasdaq Composite has risen a total of 33% this year, easily beating the S&P 500's 16.5% gain during this same period. This lift in tech stocks has undoubtedly been a tailwind for Roku's shares.
But before investors applaud Roku's gains in 2023, they should note that the stock fell 82% in 2022. Indeed, because of the stock's sharp decline last year, shares are still down 11% over the last 12 months and 67% since the start of 2022. Much of the stock's rise this year, therefore, simply represents some rebounding in the share price.
But there are some company-specific catalysts behind the stock's recent run-up. Just this week, Roku announced an important technology partnership with adtech business FreeWheel and the option to purchase products on TV using Shopify e-commerce technology.
This news comes on top of a slew of announcements from Roku throughout 2023, with the company kicking off the year by announcing the first-ever Roku-branded TV. Investors are likely betting a Roku-branded TV can further entrench the company as the leading streaming TV operating system in the U.S. and Canada.
Roku Executive Advisor Steve Louden said in a recent meeting with analysts that, with the help of its recently launched Roku-branded TV, total smart TVs with Roku built in represented 43% of TVs sold during the first quarter -- a record-high market share for the company.
Now what
Despite the growth stock's soaring price, management warned investors in its first-quarter letter to shareholders that it expects "macro uncertainties to persist throughout 2023." With consumers pressured by inflation and fearing a potential recession, Roku contends that advertiser budgets could be constrained throughout the year.
While Roku didn't provide full-year revenue guidance, it said it expected second-quarter revenue to be $770 million. This would be up only slightly from the $764 million in revenue in the second quarter of 2022.
