Wall Street suggests tuning out of Roku (ROKU) after the streaming giant turned in a severe profit warning for 2022 as it invests back into its business.
Shares of the company crashed 25% to $107 in pre-market trading Friday as the Street smashed down the reset button on Roku’s valuation.
“We don’t expect investors to hang on for the ride though. With a big cut to our EBITDA we take a much less optimistic view of Active Account value, so we slash our EV/Active Account-based valuation. We remain Equal Weight given the extent of the pull-back, but see Roku as dead money until proof points arise,” Wells Fargo media analyst Steve Cahall said in a note.
Roku saw slowing growth in the fourth quarter in areas such as active accounts and average revenue per user as people re-engaged with the real world again during the pandemic. The company’s adjusted operating margins also dropped 750 basis…
