Roku shares fall 24% after no profit

Stock Roku fell more than 25% on Friday, a day after the company reported second-quarter earnings that fell short of both upper and lower estimates.

Company recorded profit loss of 82 cents per share and revenue of $764 million, lower than consensus, as ad and device sales remain under pressure. Roku also released guidance for the third quarter, which is $200 million below expectations, and said it was withdrawing its growth estimate for the full year.

Roku attributed the losses to tough macroeconomic conditions such as inflation and the supply chain, which could hurt sales of Roku TV and other devices. He also warned that the downside pressure on the advertising market could continue.

“We believe this pullback reflects the start of the pandemic in 2020, as marketers prepared for macroeconomic uncertainty by rapidly cutting ad spending across all platforms,” Rock said in a letter to shareholders.

Susquehanna reduced Roku stock went neutral on Friday and lowered its price target to $70 from $200.

In this photo illustration, the hand holding the TV remote is pointing at the screen with the Roku logo.

Rafael Enrique | Light rocket | Getty Images

“We continue to see CTV as the next stage in the growth of digital advertising and continue to believe that ROKU is one of the companies best suited to leverage the power of CTV in the long term,” writes analyst Shyam Patil. “However, macroeconomic headwinds, such as rising inflation and supply chain disruptions, are having a major impact on business – both on the advertising and engagement side due to reduced consumer discretionary spending.”

Other tech companies that rely heavily on the advertising business also posted poor second-quarter results recently. For example, Click as well as Twitter both reported poor earnings, while Meta attributed its weak financial results to macroeconomic conditions and “weak advertising demand environment”.

Roku has lost over 62% of its value this year.