The Roku Earnings Disaster: 'This Feels Like A TiVo To Me'

Although most of the indexes are in the green in Friday’s session, there are some individual issues that are having a really bad day. One of those issues is Roku Inc ROKU, which is being destroyed after a second-quarter earnings miss.

The volatile price action in the issue makes it the PreMarket Prep Stock of the Day.

Roku Hovers Near Lows For The Move: While the indexes have been able to distance themselves from recent lows by a wide margin, Roku has not. Until Friday's price action, the low for the recent slide was made on June 14 at $72.63.

Its rebound high off that low was made on June 27 at $101.42 and was instigated by bogus rumors of a takeover by Netflix Inc (NASDAQ; NFLX).

Heading into its second-quarter report, Roku was modestly higher for the month ($85.17 vs. $82.14).

Roku was in the red for the week as it ended last Friday’s session at $88.84.

Roku's Q2 Miss, Lower Q3 Revenue Guidance: After the close on Thursday, the company reported a quarterly loss of 82 cents per share, which missed the analyst consensus estimate of a 68-cent loss by 20.59%.

This is a 257.69% decrease over earnings of 52 cents per share from the same period last year. The company reported quarterly sales of $764.41 million, which missed the analyst consensus estimate of $805.64 million by 5.12%.

This is an 18.49% increase over sales of $645.12 million in the same period last year.

To make matters worse, the company forecast its third-quarter 2022 net revenue at $700 million vs. a $901.73-million estimate. Finally, Roku announced it's withdrawing its full-year revenue growth guidance, citing uncertainties and volatility in the macro environment.

PreMarket Prep's Take On Roku: Co-host Dennis Dick went for the jugular Friday.

“This company feels like a TiVo to me,” he said.

“Most of the smart televisions have the streaming already built into them now, so [there's] not as much need for the Roku device.”

When the issue was being discussed on the show, it had sharply rebounded from its after-hours low ($60.58) and was trading at the $66 area. The author of this article alerted investors the rebound high off that low — at $67.49 — would be formidable resistance in the upcoming session.

On the downside, following the snap-back rebound off the after-hours low, there would buyers ahead of the premarket low, either looking to cover a short or attempt a long entry.

ROKU Price Action: After a much lower open Friday ($66.10 vs. $85.17), the issue only bounced to $66.46 and resumed its move lower. As discussed on the show, during its 13-minute swoon it found buyers ahead of the premarket low at $62.

As of 1:30 p.m. EST, the rebound off that low capped near its opening price at $66.05. The resumption of the move lower has taken the issue back down to the $64 area.

The discussion on Roku from Friday’s show can be found here:

Photo via Shutterstock.