Roku stock ( NASDAQ:ROKU ) isn’t doing well in the market right now. Shares of the streaming TV pioneer fell to a three-year low late last week, weighed down by another negative thesis that may be incorrect, like the last one. Since its high in July of last year, the stock has dropped 87%.
This time, the stumbling block is what a protracted recession would do to Roku’s ad-supported economic model. Regardless of what Roku’s bleak stock chart suggests, that scenario did not play out either.
Market Analysis of Roku Stock
Roku shareholders have gone through a lot in the previous 15 months, but did the original pessimistic thesis hit home? Since the stock’s peak last summer, Roku stock ( NASDAQ:ROKU ) popularity has only risen. People have mostly enjoyed the pre-pandemic social hotspots now that immunizations are generally accessible, but they’re just going to stream more after they go home.
Clearly, there are faults here. Some gusty breezes have shattered the window. Roku stock ( NASDAQ:ROKU ) is back in the red this year after becoming profitable in the second half of 2020 and for the whole year of 2021. Wall Street analysts do not expect a return to profitability anytime soon. Margins have shrunk due to supply chain difficulties in its low-margin hardware sector, but more recently in its high-margin platform division. Roku is investing heavily in content to make its platform more appealing.
This gets me to the second negative thesis: ad-supported business models will suffer if consumer wallets run dry. A white glove test does not provide the same results as the initial bearish challenge. Roku...
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