In this photo illustration, a hand holding a TV remote points to a screen displaying the Roku logo.
Rafael Henrique | light rocket | Getty Images
Shares of Roku fell more than 25% on Friday, a day after the company reported second-quarter earnings that missed both top and bottom estimates.
The company reported earnings of 82 cents a share and revenue of $764 million, both below consensus estimates, as ad and device sales remain under pressure. Roku also issued a third-quarter forecast that’s $200 million below expectations and said it was pulling back its full-year growth estimate.
Roku attributed the loss to tough macroeconomic conditions, including inflation and the supply chain, which could hurt sales of Roku TVs and other devices. He also warned that pressure from the downturn in the advertising market could continue.
“We believe this pullback reflects the onset of the pandemic in 2020, when marketers prepared for macro uncertainties by rapidly reducing ad spend across all platforms,” Roku said in a letter to shareholders.
Susquehanna downgraded Roku shares to neutral on Friday and cut their price target from $200 to $70.
“We continue to see CTV as the next stage of digital advertising growth and still believe that ROKU is one of the companies best positioned to capture the long-term CTV opportunity,” analyst Shyam Patil wrote. “However, macro headwinds such as rising inflation and supply chain disruptions are having a serious impact on the business, both on the advertising side and on the engagement side through lower spend discretion of the consumer”.
Other tech companies that rely heavily on the ad business have also recently posted poor second-quarter results. For example, Snap and Twitter posted poor earnings, while Meta attributed its weak financial results to macroeconomic conditions and a “weak advertising demand environment.”
Roku has lost over 62% of its value this year.
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