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Roku Stock Price Could Receive Support From Strong Guidance

Roku (NASDAQ: ROKU) stock price is among the best performers this year. Its shares rallied more than 330% year to date. The shares had hit an all-time high of $162 two months ago before stabilizing around $150. The company’s third-quarter revenue and earnings beat could offer further support to share price.

The company has also upgraded its full-year guidance – which is another catalyst for Roku stock price. However, some investors believe the entertainment company is trading at significantly higher valuations. Its shares are trading around 17 times to sales and 35 times to book value.

ROKU Roku, Inc. daily Stock Chart

Q3 Beat Enhances Bullish Sentiments for Roku Stock Price

The company’s third-quarter revenue of $260 million increased by $3.31 million from the consensus estimate. The revenue jumped almost 50% from the previous year’s quarter. Active accounts grew 36% from the past year period to 32.3M.

The active accounts are up 1.7 million from last quarter, and streaming hours rose 68% to 10.3B. Moreover, its average revenue per user rose by 30% to $22.58.

Its CEO said, “We continue to execute well against our long-term strategic plan as the TV market shifts to streaming. In Q3, we beat our outlook for revenue, gross profit, and adjusted EBITDA. Our business momentum and competitive differentiation make Roku an essential partner for content publishers and advertisers.”

The company claims that the dataxu acquisition would further enhance its platform’s advertising technology roadmap along with strengthening the TV streaming platform.

Future Fundamentals Are Supporting Upside Momentum

Strong future fundamentals are likely to back Roku stock price momentum in the coming days. This is evident from the updated outlook for the full year. The company now expects full-year revenue to stand in the range of $1.106B. This represents 49% growth from the last year and up from a previous expectation for 46% growth.

Roku anticipates gross profit in the range of $492M, high from earlier guidance of $485M. Overall, substantial financial growth would help its shares in accelerating the bullish trend.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.