Roku (NASDAQ:ROKU) stock is down over 8% following the release of the company's third-quarter earnings report on Nov. 3.
Revenue rose 51% year over year to $680.0 million last quarter, but that figure missed the analyst consensus estimate by $3.4 million. Net income surged year over year from $12.9 million to $68.9 million, or $0.48 per share, which easily beat analysts' expectations for just $0.06. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) similarly surged 132% to $130.1 million.
But management's guidance spooked the market. For the current quarter, Roku expects revenue to grow 37% at the midpoint of its range, falling short of the consensus forecast for 44% growth, while adjusted EBITDA is set to decline 34% to 43%.
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But could Roku's post-earnings decline represent a good buying opportunity? Let's review the good news, the bad news, and its valuation to find out.
First, the good news …
When Roku posted its second-quarter earnings report in August, some investors were disappointed by its quarter-over-quarter drop in streaming hours, which fell from 18.3 billion to 17.4 billion.
The bears claimed this slowdown, which Roku mainly attributed to reopening trends, indicated the company's growth was peaking. But in the third quarter, Roku's streaming hours grew sequentially to 18.0 billion. Its total number of active accounts and average revenue per user (ARPU) also rose sequentially and year over year:
| Metric | Total | Growth (QOQ) | Growth (YOY) |
|---|---|---|---|
| Active… |