Roku (NASDAQ:ROKU) shareholders have endured a 66% loss from investing in the stock a year ago

Roku, Inc. (NASDAQ:ROKU) shareholders will doubtless be very grateful to see the share price up 38% in the last month. But that's not enough to compensate for the decline over the last twelve months. Specifically, the stock price slipped by 66% in that time. It's not that amazing to see a bounce after a drop like that. Of course, it could be that the fall was overdone.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Roku

Because Roku made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last twelve months, Roku increased its revenue by 23%. We think that is pretty nice growth. Meanwhile, the share price tanked 66%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

Roku is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Roku stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

While the broader market lost about 7.7% in the twelve months, Roku shareholders did even worse, losing 66%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Roku you should know about.

But note: Roku may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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