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Roku stock declines despite upbeat Q2 outlook

Yahoo Finance Live anchors Julie Hyman and Brad Smith break down the decline in stock for Roku.

Video Transcript

JULIE HYMAN: Let's talk about Roku also. That company forecast better-than-expected revenue for the second quarter while still expecting macro uncertainties to persist throughout the year. The shares are down about 2 and 1/4%.

It sounds like that the chatter around the company is relatively positive. To be honest, I'm not certain why. The stock is going down, but the company is seeing some advertising headwinds, it sounds like, according to some analysts, including those over at Morgan Stanley, which also said the timeline to significant profitability is unclear. So maybe that's one of the issues here that is going on.

BRAD SMITH: Declining average revenue per user, they saw that move lower by about 5% year over year where it's coming in at about $40.67 at this point, even as the active accounts are growing by about 17% over that time, and so that could be one of the hits.

But you also look at the devices gross profit. That was down 127% year over year. And then additionally the platform gross profit was down 12% year over year. So all of that considering-- all of that factored in, you're seeing a total gross profit decline of about 7% year over year as well.

So I think perhaps that's what the Street might be lingering on a little bit more here. Our own executive editor Brian Sozzi had said that this earnings call was a dud, so I didn't go back and listen to it. I saved those five minutes, as instructed by him.

But they also mentioned that it is difficult for viewers to keep track of content they've started watching. In a recent survey, 50% of streamers said that they have abandoned a show or movie because they forgot what service or device it was on or it was too hard to find. Roku is trying to unveil some new features that help its viewers with that, so we'll see if that is kind of a net experiential additive for a lot of the Roku users out there.

I don't think I've used a Roku since the days of the pandemic when I was just watching anything-- everything on every platform. So yeah, it's been a while for me.

JULIE HYMAN: Yeah, well, let's keep talking about watching.