Roku share price tumbles after lack of Q2 earnings, outlook

  • Roku shares fell 27% on Friday after the streaming service missed second-quarter results and warned of a third-quarter revenue shortfall.
  • Advertisers and consumers cut spending in the second quarter, and the company expects that to continue through its September quarter.
  • Roku expects total third-quarter revenue of $700 million, below FactSet’s estimate of $898 million.

Roku shares lost nearly a third of their value on Friday after the entertainment streaming service warned of weaker-than-expected revenue as consumers and advertisers cut spending.

“We are in an economic environment defined by fears of recession, inflationary pressures, rising interest rates and continued supply chain disruptions,” said Roku CEO Anthony Wood and Director financier, Steve Louden, in a second-quarter letter to shareholders released Thursday evening.

Roku stock fell 27%, the lowest price since March 2020. Shares had already lost around 62% this year in Thursday’s regular session.

Investors sent shares tumbling after Roku forecast third-quarter total net revenue of $700 million on Thursday evening, up 3% year-over-year but well below of FactSet’s consensus estimate of $898 million. It also withdrew its full-year revenue growth estimate.

Roku said it experienced a “significant slowdown” in TV ad spend in the second quarter, which weighed on its platform’s revenue growth. Platform revenue rose 26% to $673 million from a year ago, but Roku said the growth was lower than expected.

“We believe this pullback reflects the onset of the pandemic in 2020, when marketers prepared for macroeconomic uncertainties by rapidly cutting ad spend across all platforms,” the company said.

Roku expects advertiser spending to continue to decline in the second half of 2022. It also expects continued moderation in consumer discretionary spending, moves that will likely hurt sales of Roku TV and Roku players.

The company posted a loss of $0.82 per share in the second quarter compared to a profit of $0.52 per share a year earlier. Revenue for the quarter ended June 30 increased to $764.4 million from $645.1 million a year ago. But analysts had expected revenue of $804 million and a loss of $0.71 a share.

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