What Happened:
Shares of streaming TV platform Roku (NASDAQ: ROKU) jumped 13.5% in the afternoon session after the company reported second quarter results that blew past analysts' revenue expectations, partly driven by a beat in Active Accounts and partly by revenue per Active Account. The company observed improvements in some ad verticals, which is encouraging in the face of growing worries about inflation and sluggish economic growth. Additionally, adjusted EBITDA beat expectations, and the company stressed the commitment to deliver positive adjusted EBITDA for the full year 2024. The only minor negative we found was that revenue decelerated. Overall, we think this was a really good quarter that should please shareholders.
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What is the market telling us:
Roku's shares are very volatile and over the last year have had 49 moves greater than 5%. But moves this big are very rare even for Roku and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move was four months ago, when the company gained 9.02% on the news that analyst Shyam Patil of Susquehanna upgraded the stock from Neutral (Hold) to Positive (Buy), highlighting that the near-term scenario seems to be "bottoming."
Roku is up 108% since the beginning of the year, and at $84.23 per share it is trading close to its 52-week high of $85.17 from July 2022. Investors who bought $1,000 worth of Roku's shares 5 years ago would now be looking at an investment worth $1,900.
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