Datasets:

---

Recag

/

Rp_CommonC_341

like 0

ERROR: type should be string, got "https://www.barrons.com/articles/roku-stock-falls-wednesday-evening-on-fourth-quarter-profit-outlook-1541631222\nRoku Keeps Growing, but Investors Don’t Like the Profit Outlook\nDavid Marino-Nachison\nUpdated Nov. 8, 2018 4:22 pm ET / Original Nov. 7, 2018 5:53 pm ET\nPhotograph by Stock Catalog\nRoku (ROKU) stock tumbled Thursday after the company reported financial results that included projected fourth-quarter losses that were wider than Wall Street expected.\nThe slide, with the stock finishing Thursday down 22% to under $46, came with the shares seeking to recover from an October plunge; they’re now down 11% this year, and are well off 52-week highs near $78.\nRoku’s third-quarter numbers included a 39% year-over-year revenue increase to $173 million—platform revenue crossed $100 million a quarter for the first time—and a net loss of 9 cents per share.\n“The opportunity before us is large and it’s a great time to be in the streaming business,” CEO Anthony Wood said on a Wednesday conference call, a transcript of which is available on Seeking Alpha.\nMeanwhile, the company set Q4 revenue guidance of between $255 million and $265 million, roughly matching Wall Street expectations. But it also said to expect a bottom line that comes in between a $4 million loss and a $3 million profit, below Factset’s consensus $7 million profit number.\nRoku has spent substantially to grow its business, with nine-month operating expenses growing faster than revenue year-over-year.\n“We’re executing well overall,” CFO Steve Louden said in a Wednesday evening interview with Barron’s.\nRoku now has nearly 24 million active accounts. It added 1.8 million in the third quarter, according to the company, roughly half coming through smart televisions built by other companies; management estimates that more than a quarter of the smart TVs sold in the U.S. this year use Roku technology, up from just over half that in 2016.\nOnce a consumer starts using devices with Roku software, they offer the company the possibility of revenue-share or advertising dollars; Roku’s average revenue per user was $17.34 in the third quarter, up both sequentially and year-over-year.\nRoku Stock Could Rally on Strong Sales of Its Streaming Video Players\nMorgan Stanley Is Buying Up Roku Stock\nRoku Stock Got Hammered This Month. A Rebound Could Be Coming\nRoku TVs look set to become even more important to the company's growth, Louden told Barron’s. (The company’s Q3 results don’t include its branded speakers, which only began shipping recently.)\n“The player business is a good business for us, but over time the share of new accounts is coming more and more from Roku TVs,” he said. “We think that’s going to be more and more of the accounts as time goes on.”\nSome device makers have said the 2018 holiday season could be extremely cutthroat, requiring companies to be extremely competitive with discounting. Roku is generally considered a value option in streaming players, and Louden noted that the company’s crucial fourth quarter is backloaded, with most sales coming after Black Friday.\nThe holidays are “always a highly competitive retail environment,” Louden said in the interview. “I’m not sure I have a sense of whether we’re doing more or less promotional activity, but it’s certainly a very competitive quarter, and we’re going to compete.”\nLater on Thursday, the company announced several discounts in connection with Black Friday, including half off its higher-end Roku Ultra streamer, which is normally $100.\nAs Roku’s audience grows, it gains clout in negotiations with contract providers; some of its most-watched content, including Netflix (NFLX) programming, doesn’t lead to much revenue. In that light, a late Wednesday CNBC report suggesting that Roku might look to move some content providers into its own app, rather than having users access them separately, could signal a strengthening position as the company grows.\n“As our scale has increased, Roku has become a more important platform for content providers and advertisers, driving both engagement and monetization,” CEO Anthony Wood wrote in his quarterly letter to investors.\nKeyBanc Capital Markets’ Evan Wingren, among Wall Street’s more bullish Roku analysts, on Wednesday maintained his $81 price target, which is well above FactSet’s roughly $68 average. And Guggenheim Partners analyst Michael Morris on Thursday reiterated his $74 price target on the stock.\n“While the digital video industry is competitive, we believe Roku has unique technology and usage assets and is an attractive pure-play on a compelling secular trend,” Morris wrote.\nThis story has been updated since it was first published to reflect share price movement and add management statements from Wednesday’s conference call, as well as analyst comment and the Black Friday deals.\nEmail David Marino-Nachison at david.marino-nachison@barrons.com. Follow him at @marinonachison and follow Barron’s Next at @barronsnext."