What Happened?
Shares of streaming TV platform Roku (NASDAQ: ROKU) jumped 15.7% in the pre-market session after the company reported strong fourth-quarter 2024 results that easily cleared analysts' sales, EBITDA, and earnings expectations. Revenue grew 22% year on year, driven by a 25% increase in platform revenue, which benefited from higher advertising demand, including political ad spending, and deeper third-party platform integrations.
However, its revenue outlook for the next quarter and the full year merely met Wall Street's expectations, raising questions about the staying power of platform revenue growth, especially as political ad spending recedes in 2025. The profit outlook was more encouraging as full-year EBITDA guidance came in well above Wall Street estimates. Still, we think this was still a solid quarter with some key areas of upside.
Following the impressive performance, Wells Fargo upgraded the stock's rating from Hold to Buy adding, "We walk away from 4Q′24 much more bullish on [forward] upside driven by inventory growth, homescreen innovation and political tailwinds in' 26/'28."
Is now the time to buy Roku? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Roku’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for Roku and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 24 days ago when the stock gained 7.4% on the news that JMP initiated coverage on the stock with a Buy rating and a $95 price target. The firm highlighted ROKU's strong position as a "top streaming platform in the U.S." and also cited the potential for the company to benefit from increasing ad spend in the connected TV market.
Roku is up 32.5% since the beginning of the year, and at $98.66 per share, has set a new 52-week high. Investors who bought $1,000 worth of Roku’s shares 5 years ago would now be looking at an investment worth $757.49.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free and will only take you a second.
