Roku stock slumped 25% on Friday despite better-than-expected earnings for its latest quarter. However the streaming giant posted weak revenue figures and issued a severe profit warning for 2022 as it invests back into its business.
- Roku reported adjusted earnings per share (EPS) of $0.17 against an expected $0.09.
- Company posted revenue of $865.3 million, below market projections of $894 million. Revenue increased 33% YoY in the quarter as both operating segments continue to be hurt by the supply chain constraints. This is a significant decrease compared to the 51% growth rate it the previous quarter and the 81% increase in the second quarter.
- The number of active accounts came in at 60.1 million, slightly above market estimates of 59.5 million. However active account growth decreased significantly from 39% to 17% for the year. This is a key indicator which shows whether a company is able to generate advertising revenue.
- Roku added 3.7 million accounts, ahead of 1.3 million last quarter but well below the 5.0 million added a year ago.
- Streaming hours rose 15% YoY to a total of record 19.5 billion. Streaming hours per account increased to 3.6 hours per day. Average platform revenue per account jumped 43% on a trailing 12-month basis due to higher pricing and larger ad inventory.
- For the current fiscal year the company expects revenue of $720 million significantly below Wall Street consensus of $748.5 million. Roku also outlined that current supply chain headwinds are unlikely to subside in the near future, with television unit sales expected to remain below pre-pandemic levels.
- Company also expects to ramp up operating expense spending that was pulled back in 2021 due to COVID-19 uncertainties.
Roku (ROKU.US) stock had lost over 50% of its value in 2022 alone. Stock launched today's session with a massive 25% bearish price gap which could mark Roku’s worst day of trading ever. If current sentiment prevails, downward move may accelerate towards the lower limit of the descending channel in which price has been moving since October 2021. The nearest resistance is located at $151.70 and is marked with 78.6% Fibonacci retracement of the upward move launched in March 2020. Source:xStation5
