Bank of America said Roku’s disappointing second-quarter results and dismal guidance suggest it’s time to sell the beaten-up streaming company’s stock. Analyst Ruplu Bhattacharya has doubled the company’s stock to under-buy and slashed the bank’s price target to $55 a share from $125, as the company faces a slump reduce ad spend amid a worsening macro picture. “Our underperformance thesis is based on a weaker macro windfall, which is causing advertisers to pull back on spending preventing Roku from fully monetizing the platform,” Bhattacharya writes. . “We see continued weakness in the distributed advertising market in 2H22. Roku is downsizing operations and slowing employee growth, which could delay its expansion plans. international.” Roku on Thursday reported earnings and revenue that fell short of analysts’ expectations for the previous quarter, as its device and ad sales came under pressure in a tough economy with inflation and other financial problems. supply chain constraints. Shares fell more than 25% on Friday following that result. Along with the bleak outlook for its ad business, Roku could also face difficulties as high inflation holds back consumer spending, Bhattacharya said, slashing its active account estimate. bank action for the company. Microsoft’s advertising partnership with Netflix could also cause problems for Roku in the future. Shares of Roku have plummeted more than 72% this year amid a broader market sell-off. Shares could fall another 35% from Thursday’s close based on Bank of America’s new price target. In addition to the downgrade, Bhattacharya slashed their EPS estimate for Roku and more than halved revenue growth expectations for 2022 and 2023. “The bulls will point to Roku’s larger size and fixation. that price has returned to pre-pandemic levels; however, we do Bhattacharya wrote: – CNBC’s Michael Bloom contributed reporting