Analyst Jeff Wlodarczak of Pivotal Research urged followers to sell already plunging Roku shares after the streaming company reported fourth-quarter revenue that fell short of Wall Street expectations.
Roku also said that first quarter revenue would be lower than expected at $720 million and that 2022 full year revenue would be $200 million below expectations. At the same time, the company plans to invest in personnel and content, cutting into profits.
“In essence, Roku is going to grow revenue at a slower than expected pace in combination with a massive ramp in expenses, into potentially a global economic slowdown with increasing levels of competition," Wlodarczak said in a research note Friday.
"The bottom line is with increasing competition, a potential significantly weakening global economy, a market that is not rewarding non-profitable tech names with long pathways to profitability and our new target price we are reducing our rating on Roku from Hold to Sell,” he said.
Roku stock was down another 20% to $114.20 a share in early trading Friday. Roku shares were down 10% on Thursday and have fallen from $482 a share last July.
Steven Cahall, analyst at Wells Fargo, said investors should hold Roku shares, given how far they’ve already fallen.
But he made a big cut to his earlier forecast, with the lower revenues coming at the same time as increased investment.
“Roku believes now is the time to invest heavily with an aim to be one of a few that survives to harvest a large global CTV O/S TAM. Maybe it's the right approach, maybe it's not...time will tell. We don't expect investors to hang on for the ride though," Cahall said. ■
