Title: Caution Before Investing in Cathie Wood's Favorite Stock
Title: Caution Before Investing in Cathie Wood's Favorite Stock
Cathie Wood, Ark Invest's forward-thinking CEO, has a knack for spotting innovative and disruptive businesses, making her a go-to figure for stock market enthusiasts seeking investment ideas. One of Ark Innovation ETF's top holdings, Roku, currently trades 83% from its peak price, tempting potential investors.
However, pay heed to one significant warning before diving into the Roku stock: the company is dropping the quarterly updates on active accounts and Average Revenue Per User (ARPU). As of Sept. 30, 2023, Roku boasted 85.5 million active accounts, a whopping 165% increase from five years prior. Investors were used to these updates to gauge the company's growth.
But with the sun setting on Q3 2024, Roku plans to stop this reporting practice, as stated in the Shareholder letter. "We will no longer report quarterly updates on Streaming Households and, by extension, ARPU," it reads. The CEO explained during the Q3 2024 earnings call that streaming households growth is not indicative of platform revenue growth due to different monetization rates across markets.
This Roku move echoes Netflix, which announced in April 2025 it would stop reporting the same figures, only sharing them for important milestones. While Netflix's stock has surged, Roku's performance has been less impressive, with negative growth in the last five years and stiff competition in the market.
Though it's crucial for investors to know the number of active accounts Roku has, especially as a growth-focused company, Roku's team could be anticipating weaker growth in the future, hence the decision to halt reporting. Despite the uncertainty, Roku remains an attractive investment due to its position in the streaming sector's long-term trend and a more reasonable price-to-sales ratio.
Enrichment insights:
- Without the quarterly active accounts and ARPU reports, investors might struggle to evaluate Roku's financial performance and make informed decisions.
- Stopping these reports could lead to negative market perceptions, which could in turn impact the stock value.
- Comparing Roku's performance over time and with competitors will also be challenging without these crucial metrics.
- The move may erode investor confidence in the company if it obscures underlying issues or lack of transparency.
In light of Roku's decision to cease reporting quarterly active accounts and ARPU, some investors might find it challenging to assess the company's financial progress and make informed investment decisions. This move could potentially lead to negative market perceptions, which might impact the stock's value. Additionally, comparing Roku's performance over time and with competitors will become more difficult without these vital metrics.