Hey Traders,
Roku, Inc. (Ticker: ROKU) is a top streaming platform in the U.S. and just reported an increase of 23% in hours of content streamed (23.9 billion).
Number of active accounts jumped 16% to 70M, and average revenue per user increased year-over-year, by 2% to $41.68.
That’s the good news. The not so good news is gross profits were down 4% and gross margins fell by 1.8% as operating expenses grew 71% creating an operating loss of nearly $250 million.
The bullish market environment has lifted all stocks and ROKU is benefitting from the environment.
However, from a macro perspective, ROKU is up against serious competition from Apple, Amazon, and Google.
Because of their lack of pricing power in an inflationary environment their upside is limited. Their fair value price ($65) is below the level they are trading in pre-market ($71.5).
ROKU has already plummeted by over 90% and has since rallied 80% from the lows of October.
The bottom line from a macro perspective – I am a seller of call spreads here as a short-term fade on this earnings rally…
Live And Trade With Passion My Friends,
Bill Griffo