Roku Stocks just had a terrible day on news of last quarter revenue miss
Roku's First Quarter 1 Earnings results were just released and the news is not good for investors. The company revenue missed investor's expectations and the stock just took a massive plunge. The company's stock just had its worse day since 2018.
Besides lower expected earnings, which were blamed on supply chain issues in North America, Roku also disclosed future sales could also be in jeopardy, which could mean an even further decline in their stock price.
At its peak, Roku stock was 77% higher, at its highest point on July 26, 2021, when it reached $473 a share. Today after the latest earning report, the stock was as low as $112.
Growth was below expectations, Roku as were profits. Earnings for the first quarter were $865.3 million, which was almost $30 Million less than a projected growth of $894 million. Their revenue still grew 33% year over year in this quarter. But this was much lower than the 51% growth rate in 2021 4TH quarter. Or the 81% growth Roku saw in the second quarter of 2021.
Analysts also changed the stock from Hold to Sell, as they projected a price of $95 instead of the lofty $350 price that they were projecting prior to this latest news.
The company CEO Anthony Wood felt there would continuing weakness going forward in the post pandemic sales of smart TVs and media streamers. And this could continue on into 2022.
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“Overall TV unit sales are likely to remain below pre-Covid levels, which could affect our active account growth,” Anthony Wood, Roku’s founder and CEO, and Louden wrote in the company’s letter to shareholders. “On the monetization side, delayed ad spend in verticals most impacted by supply/demand imbalances may continue into 2022."
Roku's CFO Steve Louden, in a call to investors, predicted revenue growth to be in the mid 30 percentile range the rest of the year.
Tough Times Could be Ahead For Roku as Competition Heats Up
As competition heats in the Smart TV market, with Android TV gaining more popularity lately, things could even become worse.
Also See: Android TV not Roku Experienced Massive Growth Last Quarter
Roku also announced the end of private channels on their platform. There were thousands of private Roku channels. Many contained Adult content not allowed in their Public Channels store. The company announced these will stop working later this month as the company will put an end to these channels. This news left many Roku owners frustrated and angry, with many threatening to switch to Android, where side loading apps aren't restricted.
If this causes another drop in active users and profits, their stock price could fall even further. Things may look bleak, but Roku may be able to innovate and pull out of this slump. They still have a great media streamer, but so does Nvidia with their Nvidia SHIELD, as does Apple with their Apple TV 4K.
Both these platforms are less restrictive than Roku and also offer hardware that is superior. But they each cost more than Roku's top model, the Roku Ultra.
In the lower end now Google has a Google TV Chromecast with a remote, that also competes with the $29 Roku Express. And it has full access to a web browser plus side loaded apps. Both which are not available on the Roku platform.
