Roku (ROKU) Stock Crashes 25% on Mixed Q4 Results and Weak Guidance, Pivotal Downgrades to Sell With a Street-Low Price Target
Shares of Roku (NASDAQ: ROKU) plunged more than 23% in premarket trading on Friday after the company reported mixed Q4 2021 results and a weak Q1 2022 guidance.
Roku reported EPS of 17 cents in the fourth quarter, down from 49 cents in the year-ago period and topping the consensus estimates of 3.9 cents per share. Net revenue came in at $865.3 million in the period, up 33% YOY and missing the analyst consensus of $893.1 million.
Player revenue was reported at $161.7 million, down 9.5% YOY and slightly above the $161 million consensus. Platform revenue was $703.6 million, up 49% YOY, but below the analyst consensus of $731.2 million.
The number of active customer accounts totaled 60.1 million in the quarter, up 17% YOY, beating the 59.7 million analyst consensus. Roku reported 19.5 billion streaming hours in the period, up 15% YOY, but below the expected 19.69 billion.
Average revenue per user totaled $41.03, up 43% YOY, and compared to the consensus estimates of $40.69.
For Q1 2022, Roku expects net revenue of $720 million, missing the consensus estimates of $751.5 million. The company forecasts adjusted EBITDA of about $55 million for the first quarter, well above analyst expectations of $78.4 million. Roku also said it expects gross profit around $360 millon.
"Overall TV unit sales are likely to remain below pre-Covid levels, which could affect our active account growth," CEO Anthony Wood and CFO Steve Louden said in a letter to investors.
On the earnings call, the management blamed supply chain headwinds for the slower active accounts growth, which is expected to continue in 2022 as well.
Pivotal Research analyst Jeffrey Wlodarczak downgraded Roku from Hold to Sell with a Street Low price target of $95.00 (from $350.00).
βIn essence, Roku is going to grow revenue at a slower than expected pace in combination with a massive ramp in expenses, into potentially a global economic slowdown with increasing levels of competition. We reduced our subscriber and revenue expectations, substantially reduced our EBITDA expectations, pushed back our medium/long term profitability expectations substantially, reduced our terminal (β26) EBITDA multiple from 24X to 15X and increased our discount rate from 9% to 10%... The bottom line is with increasing competition, a potential significantly weakening global economy, a market that is NOT rewarding non-profitable tech names with long pathways to profitability,β Wlodarczak said in a client note.
Elsewhere, Evercore ISI analyst Shweta Khajuria lowered the price target on Roku to $220.00 (from $365.00) while maintaining an Outperform rating.
By Senad Karaahmetovic | [email protected]