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Streaming TV and digital advertising are two unstoppable forces and many stocks, including mega-cap technology names are poised to thrive in the years ahead by riding these waves. TV maker Vizio Holding Corp. (VZIO) is rolling out more streaming and digital ad features that it thinks will make Vizio a hit with consumers, advertisers, and Wall Street.

Vizio stock has struggled since its March 2021 IPO and is trading under $9 per share. Is it time for investors to take a chance on this cheap tech stock given the possibilities for long-term success in the streaming and digital advertising age?

The Basics

Vizio made a name for itself in the flat-panel TV market by selling high-quality products at substantial discounts compared to its name brand and high-end competitors like Sony and Samsung. Vizio, which was founded in 2002, quickly transformed into a major player in the TV market by the late 2000s as consumers gravitated toward its low-priced, quality TVs.

Vizio initially landed deals with Costco and others, with its TVs now sold nearly everywhere, including its own e-commerce channels. Televisions are better than ever, but modern high-definition smart TVs with tons of features and stunning picture quality are also far cheaper than ever before.

Streaming Pivot

Vizio has adapted by expanding its Device segment into soundbars that compete against the likes of Sonos. Perhaps most importantly, Vizio is now all-in on streaming and digital advertising, through its smart TVs with its built-in streaming offerings. Vizio’s competitors in the space include Roku, Apple, and other streaming players that allow customers to watch paid services such as Netflix.

Vizio is working to improve its streaming capabilities and appeal to advertisers. These efforts include its revamped free streaming service called WatchFree+ and the firm said in mid-March that the service is “now the second-most-watched ad-supported streaming app on Vizio.”

Vizio also at the end of March announced the launch of a beta version of its “new cross-platform viewing solution called Jump Ads, designed to bridge the gap between linear TV and streaming services.” Vizio’s ability to attract advertisers through dynamic advertising across its SmartCast/Platform+ space should be compelling long-term as linear TV fades and marketers clamor to reach consumers.

Other Fundamentals

Vizio’s SmartCast active accounts jumped 24% in the fourth quarter of 2021 to 15.1 million. The company’s average revenue per user climbed 67% in the fourth quarter to $21.68.

Meanwhile, its Platform+ revenue soared 110% YoY to $309 million in 2021. Overall, ad revenue accounted for 78% of the total Platform+ segment, with its non-advertising sales coming primarily from data licensing.

The strength of its growing ad-focused Platform+ unit helped make up for its struggling Device business, which still accounted for roughly 85% of Vizio’s total 2021 revenue. The setback came as TV sales slumped across the industry last year amid global supply chain setbacks and tough YoY comparisons.

Vizio’s Device segment revenue fell 4% vs. 2020, with Smart TV shipments down 22%. Thankfully, TV shipments totaled 1.5 million in the fourth quarter, marking two consecutive quarters of sequential growth following the second quarter low.

Vizio’s total 2021 revenue climbed 4% to $2.1 billion, while its adjusted earnings fell from +$0.55 per share in 2020 to an adjusted loss of -$0.22 a share, driven by rising costs pressures, investment spending, and more.

Looking ahead, Zacks estimates call for Vizio’s fiscal 2022 revenue to climb over 6%, with FY23 projected to come in 9% higher at $2.45 billion. Plus, it is projected to swing from its big adjusted loss up to +$0.03 per share. Better yet, VZIO is projected to soar all the way to +$0.44 per share in 2023.

Vizio’s mixed earnings revisions activity since its Q4 release helps it land a Zacks Rank #3 (Hold). Its most recent Zacks estimates, however, mark big upside to the current consensus, which might be a good sign. And VZIO easily beat our Q4 estimate.

Bottom Line

Vizio shares have fallen roughly 55% in 2022, as part of a larger 62% downturn in the past 12 months. The stock dropped again on Tuesday and currently hovers around $8.40 per share. Despite all of the setbacks and the headwinds, Wall Street remains high on Vizio’s longer-term outlook, with nine of the 10 brokerage recommendations Zacks has coming it at “Strong Buys,” with the other a “Buy.”

VZIO’s current Zacks consensus price target of $24.20 a share marks 188% upside to Tuesday’s price. Therefore, some investors might want to consider taking a chance on this cheap tech stock that offers the potential to capture growth within digital advertising and streaming TV.