Roku’s Horror Picture Show; Crouching Kroger Hidden Publix
Sweet Streams Are Made Of These
Who am I to disagree? I’ve streamed ‘round the world and the seven seas (thank you, VPNs).
Everybody’s streaming something … well, except for that one guy on our team who watches absolutely no TV. What’s up with that?
Great Ones, Great Stuff Picks investors, newbie readers just joining us for a little campfire kumbaya … if you couldn’t tell by now, it’s Roku (Nasdaq: ROKU) time.
Roku reported earnings after yesterday’s close and proved beyond all doubt that the 2021 two-step is alive and well this season. That dastardly tango in the earnings arena where companies report stellar quarterly results, raise guidance and then plunge due to heavy profit-taking? Yeah, that.
The sultan of streams’ earnings reports are a well-rehearsed routine by now. Roku delivers impressive numbers, mostly beats analysts’ targets but falls like a rock because the market’s focusing on some petty, insignificant would-be narrative.
Let’s dig into this quarter’s numbers, shall we?
Roku’s revenue rocketed up 51% year over year to reach $680 million, falling just short of the Street’s target of $683.4 million. Earnings, on the other hand, came in at $0.48 per share and obliterated estimates for $0.06 per share.
And the list goes on: Roku users are watching stuff more than ever, with streaming hours up 21% year over year.
It’s not just Team Great Stuff who have collapsed into the couch crevices many a night during the pandemic — the average Roku user streams 3.5 hours of content every single day.
And with Roku’s attention to monetizing its platform and diving deeper into the ad revenue rabbit hole, every new user is a gold mine of ad-viewing attention. The more users who join Roku’s platform … and the more time spent watching TV ads … the more money that lines ROKU investors’ pockets.
About 1.3 million active accounts joined the platform last quarter, totaling 56.4 million captive viewers. Yet to Roku (and Wall Street), this represents a slowdown in active subscriber growth. Analysts wanted to see Roku hit 56.7 million active accounts, but no can do, buckaroo.
I’ve said it once, and I’ll say it again now that analysts are smoking something funny to come up with these expectations this season. But Roku’s own reason for the apparent “slowdown?” You guessed it: supply chain struggles.
And this is where our sweet, sweet streaming dream … ends.
ROKU shares were down as much as 9% after the report until some keen investors realized there was something rotten in Roku-ville, as far as this sell-off is concerned.
It stands to reason that if you can’t get your hands on a TV, you’re not signing up for Roku or buying Roku hardware either. Those sales would fall under Roku’s Player Revenue, which was “only” $97.4 million last quarter.
Yet, this segment makes up an increasingly small part of Roku’s overall revenue, while its other spinning plates keep churning out cash. Ad revenue for the win! This Player Revenue is the only thing that would get disrupted by supply chain issues, yet that’s all the media wants to worry about right now.
So, if these supply chain problems really aren’t that big of a deal for Roku’s overall revenue … what actually spooked Wall Street about Roku’s report?
It was guidance. Shame on Roku for not predicting the future! Analysts are oh so accurate at it, don’t you know…
Roku now expects fourth-quarter revenue will come in at $893 million — a whole 37% jump from the year prior. But in the midnight hour, Wall Street cried: more, more, more!
Analysts want Roku to hit $948.5 million in revenue next quarter. Never mind that 37% year-over-year revenue growth is still insane. Never mind that Roku is still annihilating analysts’ lowballed earnings expectations every quarter. Never mind all that teeming streaming logic … it’s just not enough to wet Wall Street’s whistle.
If you ask me, ROKU’s drop is way overdone, and this sell-off is now a buying opportunity if you weren’t already holding ROKU. This is your classic 2021 two-step if there ever was one.
Supply chain holdups make for great headline fodder — guidance over-estimations, not so much. The market is just panic-selling ROKU at this point, willfully ignorant of what else the company has shaking up its sleeve.
For Great Stuff Picks investors in ROKU, hold your head up (movin’ on). Keep your head up (movin’ on). Roku will keep on keeping on — overeager analysts notwithstanding.
Editor’s Note: The No. 1 Investment Of The 2020s
A technology that my colleague Adam calls “Imperium” is about to spark the biggest investment mega trend in history … with one small Silicon Valley company at the center of it all.
According to experts, Imperium is set to go from virtually unknown … to having 2 billion users in the next four years, launching a stock market gravy train, almost nobody sees coming.
I pity the fool who tries to unseat Publix as the top grocery store chain in Florida — seriously, its state flag is a delicious-looking pile of Publix chicken tendies blowing in the wind.
Obviously, I’m kidding about that last part. But considering you can’t drive a mile through Florida without seeing a bright green Publix logo, it’d take at least a medium-sized army to unseat Publix’s supermarket dominion.
Not that that’s stopping Kroger (NYSE: KR) from giving it the good old college try. You see, Kroger wants to penetrate Florida’s grocery store market … without opening a single walk-in supermarket anywhere in the state.
Instead, Kroger plans to build a giant automated warehouse the size of eight football fields somewhere hopefully far-removed from the Everglades, with — you guessed it — robots running the whole operation. If only Isaac Asimov was alive to witness this droid-driven dystopia.
Honestly, if Kroger launched this same operation anywhere else in the country — and you better believe it plans to — then I’d be all about it. It’s not that far-fetched to have robots package your grocery order and then hand it off to a (human) delivery driver.
And it’s not like loads of other companies don’t already have robots running the bulk of their warehouse operations.
The problem is that Kroger’s stepping into gator country, and native Floridians are nothing if not loyal to their born-and-bred Florida brands. As one of my colleagues put it: “Unless Kroger’s got pub subs, it can turn around and leave.”
Apparently, the bulk of Kroger’s investors live in different parts of the country and don’t have the same misgivings. KR stock rallied higher following the announcement of its grocery chain coup.
If you needed more convincing that Fisker’s (NYSE: FSR) a risky investment bet at best, look no further than the wannabe electric vehicle (EV) maker’s latest quarterly earnings update.
Fisker reported a loss of $0.37 per share last night on zero sales … seeing as it has yet to make a single EV. The earnings miss shouldn’t come as any big surprise to FSR investors, as the company’s still developing its first all-electric SUV, the Ocean.
And now I’m gonna have a bunch of random Frank Ocean songs stuck in my head for the rest of the day…
Back at the ranch, CEO Henrik Fisker promised that everything was A-OK on Fisker’s production front, saying that the “critical sourcing phase for Fisker Ocean is now largely complete.” Loosely translated, Fisker’s on track to meet its production demands and should start rolling out the Ocean sometime in 2023.
If that sounds vaguely familiar to you … it should. Fisker basically gives us the same update every single quarter: We’re, like … really, really close to making an EV, guys. Until then, diamond hands!
Same as it ever was. Same as it ever shall be.
Clearly, I’m not all that hyped by Fisker’s optimism — and neither was Wall Street. FSR stock is down 4.5% on the “EV maker’s” non-news heavy announcement and will likely remain volatile until Fisker delivers a vehicle … any vehicle, at this point.
But one more trip around the sun, and everyone and their mother is going to have an EV on the market. What makes Fisker think it’s so special?
The surge in EV demand is also creating a surge in the materials critical to having these EVs come off the assembly line.
There’s only one company in the entire Western Hemisphere that supplies this critical material on such a large scale. And as EVs take over roadways all across America … they will rely on this material for future success.
Who’s the fairest of them all? If your mind automatically drifted to online furniture vendor Wayfair (NYSE: W), do not pass go and do not collect $200.
The home furnishing fiend reported earnings this morning that could shatter even the sturdiest mirror and give Wayfair investors seven years of bad luck … or something along those lines.
Not only did Wayfair’s revenue decline 19% from a year ago, but plummeting sales contributed to the company’s painful $78 million loss this quarter. Compare that to the $173 million Wayfair made in the third quarter of 2020 … and you can see why Wall Street started chucking W stock out with the bathwater.
What problems plagued the online furniture purveyor?
Let me guess … supply chain issues.
Actually, no! Not entirely, anyway. This time, good-old-fashioned disinterest drove the nail into Wayfair’s coffin. I guess that whole “economic reopening” thing didn’t benefit everyone, or at least that’s the excuse Wayfair CEO Niraj Shah is giving investors:
Let’s just hope that Wayfair doesn’t try to combat this e-commerce slump by opening more brick-and-mortar stores than that one random showroom up in Natick, Massachusetts. (Take note, Warby Parker).
Brace with me, Great Ones … we’re discussing vaccines once more.
It’s the week of vaxmaker earnings reports, and if you had any doubts that Moderna (Nasdaq: MRNA) was losing ground in the great vax race, here’s your sign. The company reported $5 billion in revenue for the quarter, missing the Street’s target of $6.2 billion.
Just a few days ago, Pfizer (NYSE: PFE) reported $13 billion in vaccine sales for the quarter — more than double Moderna’s vaccine revenue and much higher than analysts’ estimates for $10.9 billion in vaccine revenue.
The U.S. is buying heaps of vaccines from rival Pfizer … not so much from Moderna. Pfizer had the first-to-the-market advantage with vaccines for teens. Them’s the ropes when you’re the new pharma on the street, Moderna.
Besides, you can’t just name your shot the “Spikevax” and expect it to be a bestseller. C’mon now. Not for nothing, but Moderna isn’t giving up its brave, valiant fight to jab the world, as CEO Stéphane Bancel fires back: “We will not rest until our vaccine is available to anyone who needs it.”
I should hope so, because Pfizer ain’t resting either.
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