Why Roku Stock Crashed Today

Roku (NASDAQ:ROKU) shares dropped on Friday after the digital media platform warned of slowing growth. Roku’s stock price was down more than 25% as of 2 p.m. ET today.

Photo by Tima Miroshnichenko from Pexels

Roku’s sales increased by 33% year on year to $865.3 million in the fourth quarter. The number of active accounts at the organization increased by 17% to 60.1 million. In turn, the number of hours streamed on its platform climbed by 15% to 19.5 billion.

Furthermore, Roku’s advertising-driven monetization initiatives increased its average revenue per user (ARPU) by 43 percent to $41.03.

Wall Street, on the other hand, was anticipating an even better result. Revenue fell short of the $894 million median analyst projection.

Roku also provided lackluster advice. Revenue is expected to increase by 25% year on year to $720 million, with adjusted profits before interest, taxes, depreciation, and amortization (EBITDA) of $55 million. Analysts predicted revenue of $748.5 million and adjusted EBITDA of $79.2 million.

And now?

Roku’s growth is certainly slowing. The combination of lessening coronavirus-related limitations, supply chain issues, and more competition is having a significant impact.

People are expected to spend less time watching TV when they return to outside activities. Meanwhile, chip shortages are putting a damper on TV sales. More concerning is Amazon’s intense rivalry, which released a new range of smart TVs in September.

Furthermore, the present market climate has been unforgiving for premium-priced growth stocks, particularly those whose speed of expansion has slowed as the epidemic fades. Roku is now firmly in that camp, as seen by the sharp drop in its share price today.

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