Watch This Unloved Streaming Stock for Signs of a Turnaround

As streaming hits a new milestone, Roku could make a compelling, albeit risky, investment... [Derby City Daily logo]( [Derby City Daily logo]( July 17, 2024 [Watch This Unloved Streaming Stock for Signs of a Turnaround]( By Andy Swan If the transition from traditional cable to streaming platforms wasn’t “official” already, it is now. According to Nielsen’s “The Gauge,” which gives industry onlookers a clear snapshot of where – and how – consumers are watching TV, streaming’s share of total TV usage hit an all-time record high in June at 40.3%... “The highest share of TV ever reported in The Gauge.” Source: nielsen.com As advertisers follow viewers to digital platforms, Roku's (ROKU) role in connecting ad dollars with consumer screens could make it a compelling, albeit risky, investment. Unlike many of its competitors, Roku goes beyond streaming subscriptions – offering the largest streaming operating system (OS) in the U.S. and a full suite of smart TVs, speakers, and home devices. It also provides a unique global search feature that makes searching for content across different platforms seamless. But the company – and its stock price – have had a tough go of it in 2024. Rising competition from companies like [Amazon.com (AMZN)]( [Alphabet (GOOGL)]( and [Apple (AAPL)]( are increasing pressure on Roku. These behemoths are expanding aggressively in the streaming space through their own Amazon Prime, YouTube, and Apple TV offerings. [Walmart's (WMT) planned acquisition of Vizio (VZIO)]( presents another big competitive risk. If finalized, the $2.3 billion deal will hand Walmart one of the most popular smart TV brands in America, making it a direct threat to Roku’s otherwise unique value proposition. And profitability concerns are front and center. In the first quarter, Roku reported a net loss of $50.85 million – a significant improvement from the $193.6 million lost in the same period last year. Gross profit increased by 15% year over year to $388.3 million, and total operating expenses fell by 16% to $460.3 million. Roku is making strides but still has a long road. Analysts project continued losses through 2025. Roku’s challenges are many, and they should not be taken lightly. But they also mean the bar is low... and investors will be tuned in for signs of a turnaround into earnings. Here’s a look at the opportunities that could lift this down-and-out name... SPONSORED AD [TradeSmith Presents: “The 5-Day Trade Experience”]( It’s a bold promise, but one we fully stand behind: Starting next Monday, the first five (5) trades you receive will ALL be winners... or you get every penny back. (We’ll be tracking these trades, and you’ll be able to follow along.) [Before this offer expires this Sunday at midnight, get the full details here](. AI, Live Sports Are Significant Opportunities ✓ Roku is honing its ad skills with AI and partnerships. Roku Exchange, an AI-driven advertising technology platform, enhances Roku's ad capabilities by connecting premium ad inventory with advertiser demand and optimizing campaigns using data and AI. It integrates with demand-side platforms like [The Trade Desk (TTD)]( Google Display & Video 360, and Yahoo DSP, providing tailored ad experiences and broader programmatic access, which strengthen Roku's position in the [advertising market](. [Last week]( you saw how ad spend is on track to surge in the back half of this year, propelled by events like the 2024 election and [Summer Olympics](. And Connected TV (CTV), Roku’s specialty, will be the fastest-growing medium of them all. Source: eMarketer ✓ Roku is also dipping its toe into live sports. A Major League Baseball (MLB) deal allows Roku to broadcast 18 MLB games throughout the season for free on The Roku Channel, without blackout restrictions. This means that fans can watch these games from anywhere with an internet connection. The increasing fragmentation of [live sports]( could benefit Roku if it can effectively use its platform to make games easier for its users to find. Take the National Football League (NFL), for instance. You'll need access to nearly 10 channels/streaming services to watch the games. Roku is known for simplifying the consumer experience, so it could step in to ease a consumer pain point here. Source: finance.yahoo.com SPONSORED AD [‘Bombshell’ Presentation Exposes Dark Side of Tech Billionaires]( Blistering presentation exposes dark underbelly of Big Tech; their control over the economy and what you can do about it. If you watch just one presentation this year, make sure it’s this one. [Click here to view]( Putting Things Into Perspective Roku is a beast. The platform reached over 80 million active accounts worldwide by the end of 2023, with users streaming more than 100 billion hours of content, averaging 4.1 hours per day per account. As the market sells the stock on fears of competition, an opportunity may be brewing for long-term investors. Shares are down 27% year to date (YTD). Source: TradingView We'll be watching for signs of a turnaround when the company reports earnings next week. LikeFolio data looks muted for Roku right now, with web visits down 4% year over year. (Still, that’s an improvement [from February]( But many smart TV users may not even realize they are using a Roku device to stream their favorite shows... so no website to explore there. And the company certainly has streaming tailwinds going for it. While competition grows and profitability remains a challenge, a small, risk-defined position in Roku MAY be warranted as the company seeks stability. Remember: The bar is low. Bottom line: We've got a close eye on this company but aren't ready to pull the trigger quite yet. Until next time, [Andy Swan's signature] [Andy Swan's signature] Andy Swan Founder, LikeFolio Discover More Free Insights from Derby City Daily Here's what you may have missed from Derby City Daily this week... ✓ [Is Tesla More Than a Car Company? Setting the Record Straight]( ✓ [ONON: An Olympic-Caliber Profit Play]( ✓ [It’s a Great Year for GOOGL: Should You Be Buying?]( Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [The Infinite Income Manifesto]( [25 Doomed Blue Chip Stocks]( [5 Unapologetically Profitable Stocks for 2024]( © 2024 TradeSmith, LLC t/a Derby City Insights. All Rights Reserved. 1125 N. Charles Street, Baltimore, MD 21201 To unsubscribe or change your email preferences, please [click here](. [Terms of Use]( | [Privacy Policy](