Yahoo Finance's Brian Sozzi and Julie Hyman discuss how shares of Roku are trading after Pivotal rerated the stock.

Video Transcript

BRIAN SOZZI: Another stock we continue to track is Roku. As Pivotal Research dropped the hammer on its rating to sell after what it deemed an awful second quarter and forward guidance. The research outfit views the stock as a fundamental short.

Says Pivotal, management wrapped expenses dramatically into what we believe will be a 2023 recession which is likely to lead to lower than consensus revenue growth, and larger losses through 2023 and possibly 2024 depending on the length of what we view as an inevitable recession. So again, the Street reaction after a very challenging, disappointing for Roku continues. And Pivotal very vocal.

JULIE HYMAN: Yeah, definitely. I mean, it-- you know, and if you look at that year-to-date chart, I guess it's seen a little bit of a recovery over the last--

BRIAN SOZZI: Oh, here, you just had to zoom out a little bit.

JULIE HYMAN: Yeah, the year-to-date chart kind of tells the story here. I don't know what will cause investors to pivot. I think it's a little-- no?

[LAUGHTER]

That fell flat. Anyway, it doesn't seem like there are any upcoming catalysts for Roku.

BRAD SMITH: No. And for Roku the biggest catalyst that they did have was perhaps getting the partnerships to allow them to not have to continue to produce their own hardware.

And even if you see some of the consolidation within the amount of streaming services and where they want to have those services placed, there's gonna be a day where some of the partnerships that go through the Roku hub, they're gonna say, well, if you're also gonna play in the content space, why would we continue to have this partnership and allow us to be accessed via you, but at the same time, we realize that we can create more direct partnerships or direct access points just going it alone?

And so I think that's a larger kind of implication that could be a headwind in the near future. But no catalysts.

BRIAN SOZZI: Well, a potential tailwind is that-- you know, that ballpark hot dog documentary on Roku, I hear they're working.