Entering text into the input field will update the search result below

Roku: Buy The Drop Before Earnings

Nov. 02, 2021 11:20 AM ETRoku, Inc. (ROKU)NFLX71 Comments
The Asian Investor profile picture
The Asian Investor


  • Roku went through a 35% drop in pricing since July.
  • Roku benefits from a shift to streaming TV and will continue to grow rapidly.
  • Roku has more potential than Netflix and is growing faster.

Roku sign and logo on the modern facade of consumer electronics and broadcast media company headquarters in Silicon Valley

Michael Vi/iStock Editorial via Getty Images

Shares of Roku (NASDAQ:ROKU) face a fresh catalyst this week when the streaming service provider is set to open up its books for the third-quarter tomorrow. Buyers can look forward to improving user monetization, rising

This article was written by

The Asian Investor profile picture
I look for high-risk, high-reward situations. Five largest portfolio holdings: Bitcoin, SoFi, Alibaba, PayPal, Western Alliance. Early buyer of cryptocurrencies. I live in Thailand :)

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ROKU either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (71)

Does anyone know what chances are for Roku to get a decent deal with Google/YouTube?
I don't think the price recovers - if at all - before there is a positive news coming from their negotiations with Google.
In the meantime your loss tolerance may be really tested. I lost a value of a good lunch and a very good dinner before dumping R shares at $298.
Ooops on this call!
Bad news today after earnings. What do we say to that?
The Asian Investor profile picture
@agsserv This will not last... is what I am going to say to that...
itchyandscratchy9 profile picture
$ROKU is a fantastic company whose stock is going through a rough patch. I will buy this dip with a long term horizon.
@itchyandscratchy9 I bought today as well. With Winter coming , I think people will be staying in with this inflation and costs
The Asian Investor profile picture
@itchyandscratchy9 Great value to be had here
Well, how about to "Buy the drop After Earnings", would have more sense in the Roku case.
The Asian Investor profile picture
@Mirage57 If you knew this in advance, then yes :)
@The Asian Investor :)... of course 😉, that would be a feast to short it before becoming public. Keep writing, your analysis are good and no one is always right, even Mr. B.
The Asian Investor profile picture
@Mirage57 Thank you very much for your support and comment! :)
tamnguyenga profile picture
Well they release QER and sp drop! Not sure of the real reason
ijeff profile picture
For everyone wondering about the huge drop in Roku at market open I noticed all these analysts are lowering their price targets. I've seen this happen to many other stocks I own. Even though the lower target is still well above the current price, the stock price seems to drop like a rock. Quite a few times I've found this to be a good buying opportunity.
The Asian Investor profile picture
@ijeff I believe they just adjust price targets and follow the general price trend. I pay no attention to them.
P8inKill3r profile picture
Did you mean "Buy the plunge after earnings?
GreenPirate profile picture
@P8inKill3r We did just that. Got some shares at 287+ which was encouraging as the bottom rose from there into just below 300.
The Asian Investor profile picture
@P8inKill3r This is also a good way to put it :)
I'll buy it at 8% down further when it opens ! thanks for the Heads up but I'll buy after the earnings on this one
GreenPirate profile picture
Dear Asian Investor,

As I've pointed out ad nauseam, Anthony J. Wood's salary of $15,363,568 annually, is absurd. The article below establishes that shareholders directly pay it. We are Wood's boss when it comes to salary. And as his boss I say, "Enough already!"
Over ten years at the above rate, Wood will remove $153,635,680 million from the company he founded, resigned from, and then returned to, so that he might once again collect this gargantuan salary and keep ROKU's share price down for average investors like me.
This removal of large amounts of ROKU's annual income by Wood and other executives, creates volatility. Thus, we see ROKU's share price waffling by as much as $50 to $100 a share during a given quarter.

For the third quarter of 2021, ROKU's revenues were $645.12 Million,
Net income was $73.47 Million. Investors were not impressed. Fundamentally, the math does NOT work. ROKU pays several other top executives millions of dollars annually. So, CEO and Executive Pay at ROKU is out of control.

'Does high CEO pay matter to shareholders?' www.epi.org/...

'Last month, we did an analysis that examined the impact of a provision of the Affordable Care Act limiting the amount of CEO pay that could be deducted from profits to $500,000.'

'In the years after it took effect, this provision raised the cost of CEO pay to employers (i.e., shareholders) by more than 50 percent. Prior to 2013, shareholders of health insurance companies effectively paid just 65 cents on every dollar of CEO compensation, since their taxes would fall by 35 cents for every dollar they paid out. After 2013, they would be paying 100 cents of every dollar.'
The Asian Investor profile picture
@GreenPirate Thank you for your comment. I believe then the same argument could be made for Netflix... but look at what happened to the valuation of the company over the last decade.
and definitely buy the drop after earnings! haha
@Nukems and there it is !
The Asian Investor profile picture
@Nukems This would have been even better :)
ijeff profile picture
I like Roku's business model and current positioning far better than Netflix. Still not sure Roku is a buy yet. I've owned it and sold earlier this year. Price just got too crazy this past summer. Now the luster is off a bit so might still find a better buy opportunity again below $300.
Are you kidding me? you must be a short seller.
@barcelona kid as U clearly see, ijeff was right, buying below 300 and if they don't get an agreement with Google soon (this is to continue collaboration with YouTube), you will see a gigantic reduction of Roku share price.
How can Roku beat earning per share by 666.41% and still be down after hours?
The Asian Investor profile picture
@tilolite Sometimes the market just makes no sense...
Through with Roku as of today. I bought it before Q2. Then it TANKED and I've been hemorrhaging ever since. Was hoping today would cauterize the wound but no - it ripped the scab off and now i'm down another 26 points. SOLD. It's worth the loss to get that monkey off my back. It'll prob. go to the moon now - i don't care. Roku's out of my life. Well, except for my Roku set-top device which constantly gets hacked. It's not even a secure device. I have strangers watching my premium channels when I'm not looking.
ijeff profile picture
@SpitshineKid Perhaps you need to look at your wifi security and not blame it on your Roku device?
GreenPirate profile picture
@SpitshineKid You can set your wifi up to manage who uses it. You can easily block others. Check it every week for a month. You may even find that you can not only discourage your nosy neighbors, you can also get a sense of who they are.
@GreenPirate Thanks. The crazy thing is how would my neighbors possibly know my WIFI password? Plus I change it every time I get fed up with Roku hackers. Not sure what u mean by block others. I wouldn't know who to block.
Man, I bought in today because of this article and sold immediately after reading that Anthony Wood sold 27 million in shares on Monday. Felt so sketch, glad I pulled out.
The Asian Investor profile picture
@AsianSpicoli Sorry to read that. But Roku should bounce back, the firm is in a long term growth trend and will continue to narrow losses and grow ARPU
No one seems to care about ARPU jump and supply chain issues with embedded tVs. Buying dip.
@RestaurantGuy2 we’ll find out tomorrow morning. AH mean nothing until we get confirmation in the open. ARPU jump is very impressive.
GreenPirate profile picture
Its official. ROKU execs are bad at characterizing their own success. ALL US companies are seeing supply chain problems, but they could improve. Plus, ROKU could take measures to assure that they will improve. Their well earned reputation for crapping on ROKU investors at earnings time remains intact.


"For the fourth quarter, Roku anticipates revenue of $885 million to $900 million and adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $65 million to $75 million. Analysts were modeling $946 million in fourth-quarter revenue and $86 million in adjusted Ebitda.

"Looking ahead, our business fundamentals remain strong but we are mindful that the challenges created by the global supply-chain disruptions will likely continue into 2022," the company noted in its shareholder letter. "These headwinds may have a broad impact on the holiday season in terms of consumer confidence, product pricing and availability, and advertising spend levels." "
GreenPirate profile picture
ROKU needs to change the way they report earnings and start reporting like all other companies. Plus, rip away the gigantic salaries for "executives" and ROKU's numbers will leap for those who make things work, users and investors.

Shame on ROKU execs for stealing such a giant's share of the wealth that investors should be profiting from.
what about after?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.