The continued shift of content providers, audiences and advertisers to CTV (Connected TV) benefits streaming technology company Roku (ROKU).
Thanks to secular industry trends, Roku’s active accounts and ARPU (Average Income Per User) have increased year over year and sequentially over the first two quarters of 2021. Despite the strength of its KPIs, Roku stock is down around 4.3% so far this year, significantly underperforming the Nasdaq Composite Index.
The answer to this lies in its website traffic data. Thanks to the big aggregator of financial data, TipRanks, it is now possible to quickly determine the evolution of traffic on a company’s website. It is a powerful tool because it gives a glimpse of what lies ahead.
Take the case of Robinhood Markets (HOOD). According to TipRanks new website traffic tool, total website volumes for Robinhood.com have fallen by more than 50% since the first quarter. The decline in website traffic was well reflected in its weak third quarter impression.
Likewise, Shopify (STORE) Website traffic volumes have declined since the start of this year, after which the e-commerce company posted lower than expected financial numbers in its final quarter.
Going back to Roku, its total website traffic (including mobiles and desktops) declined by around 22% in the first half of this year and took a toll on its streaming hours and as a result, on the course of its action. Increased competition and tough year-to-year comparisons are the reasons for its slowing website traffic volumes.
While Roku’s website visits slowed in the first half of 2021, they are showing signs of sequential improvement. Total website traffic improved 3.1% in the third quarter from the second quarter, indicating that the company could report strong financial results in the third quarter. Meanwhile, his active accounts and ARPU may continue to increase. I maintain a bullish view on Roku.
Roku will announce its third quarter financial figures on November 3. Wall Street expects the company to post adjusted earnings of $ 0.06 per share on revenue of $ 680.59 million.
While Roku’s revenue is expected to grow both year over year and on a sequential basis, its profits are likely to tend to decline due to increased operating expenses, including investments in sales and marketing, workforce and product development.
Meanwhile, on TipRanks, the Roku stock shows a strong buy consensus rating, based on 13 buys and 2 takes. However, Roku scores 7 out of 10 according to TipRanks’ Smart Score rating system, indicating that it will likely perform in line with market averages.
See the best Smart Score actions >>
Still, the average Roku price target of $ 458.21 implies upside potential of 44.2% from current levels.
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Disclosure: As of the date of publication, Amit Singh does not have a position at any of the companies described in this article.
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