Roku Stock Is Tumbling Friday - Here's Why

Roku, Inc ROKU stock is trading lower Friday, a day after it reported an upbeat financial fourth-quarter results.

The company clocked a fourth-quarter revenue of $984.43 million, up 14% year-over-year ahead of the Street consensus of $968.24 million.

The EPS loss of $(0.55) missed the Street loss estimate of $(0.54).

It expects first-quarter revenue of $850.00 million, above the consensus of $833.57 million. 

Roku added 4.2 million net accounts in the quarter. Average revenue per user was $39.92, down 4% year-over-year. The company had 29.1 billion streaming hours in the fourth quarter, up 21% year-over-year.

Oppenheimer analyst Jason Helfstein downgraded Roku from Outperform to Perform.

Roku remains engaged in many initiatives to drive its topline and margins.

In January, the TV streaming devices company showcased its premium Pro Series TVs, targeting the high-end market with models up to $1,500, challenging the likes of Samsung and LG.

Streaming companies, including Roku, Walt Disney Co DIS, Alphabet Inc GOOG GOOGL YouTube tapped GroupM, WPP’s media-buying unit, to simplify ad buying in streaming environments as more viewers shift to on-demand streaming to avoid ads.

A critical factor for Roku’s success is Netflix Inc’s NFLX commitment to expanding its ad-supported tier, intending to enhance its advertising revenue significantly.

ROKU Stock Prediction For 2024

Equity research analysts on and off Wall Street typically use earnings growth and fundamental research as a form of valuation and forecasting. But many in trading turn to technical analysis as a way to form predictive models for share price trajectory.

Some investors look to trends to help forecast where they believe a stock could trade at a certain point in the future. Looking at Roku, an investor could make an assessment about a stock's long term prospects using a moving average and trend line.

If they believe a stock will remain above the moving average, which many believe is a bullish signal, they can extrapolate that trend into the future using a trend line. For Roku, the 200-day moving average sits at $77.94, according to Benzinga Pro, which is above the current price of $73.51. For more on charts and trend lines, see a description here.

Traders believe that when a stock is above its moving average, it is a generally bullish signal, and when it crosses below, it is a more negative signal. Investors could use trend lines to make an educated guess about where a stock could trade at a later date if conditions remain stable.

Price Action: ROKU shares traded lower by 22.40% at $73.36 on the last check Friday.

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