This Netflix Move Could Be a Game Changer for Roku
Roku (NASDAQ: ROKU) delivered better-than-expected first-quarter sales when it reported earnings late last month. Revenue increased 28% year over year to $734 million, ahead of analysts' consensus estimate of $718 million. The stock price is down about 18% in the past month, but it started to turn higher after the earnings report.
Most of the stock's slide can be blamed on slowing growth in active accounts. Roku added 3.7 million accounts in the fourth quarter followed by 1.2 million in the first quarter. That mirrored the sluggish performance at Netflix (NASDAQ: NFLX), which reported a net loss of 200,000 paid subscribers.
Still, investors shouldn't assume that the status quo of weak growth will continue. During Netflix's recent first-quarter call, Netflix CEO Reed Hastings said the company is considering adding a lower-priced plan that is supported by advertising. If Netflix follows through, it could lift user growth for Roku and shift the sentiment around the stock.
Source Fool.com
