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Nov. 7, 2019, 7:48 a.m. EST

Roku shares slump 15% on widening loss

Shares have jumped nearly 400% this year

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By Claudia Assis, MarketWatch , Jon Swartz


Bloomberg News/Landov
A shopper carries an Insignia Roku TV television at a Best Buy store in Kentucky in 2017.

Roku Inc. shares were creamed 15% in after-hours trading Wednesday after it reported a third-quarter loss nearly triple that of a year ago.

Roku /zigman2/quotes/205087179/composite ROKU +0.89% , a maker of video-streaming hardware, reported an adjusted loss of $26.5 million, or 22 cents a share, compared with a loss of $9.5 million, or 9 cents a share, in the year-ago period. The stock was down 14% premarket Thursday.

Revenue did jump 50% to $260.9 million, from $173.4 million a year ago. And the company reported 32.3 million active accounts, a net addition of 1.7 million from the previous quarter. Roku also reported a 30% year-over-year hike in average revenue per user, at $22.58. Both figures beat the estimates of Wall Street analysts.

Analysts polled by FactSet had expected Roku to report a GAAP loss of 28 cents a share on sales of $257 million.

See also: Roku remains a promising stock even after this year’s surge

Separately, Roku on Wednesday announced its intention acquire ad-tech company Dataxu for $150 million. “We believe the dataxu acquisition will accelerate our platform’s advertising technology roadmap, strengthen our already industry-leading TV streaming platform and give us the opportunity to create an even more appealing offering for advertisers,” Roku Chief Executive Anthony Wood and Chief Financial Officer Steve Louden said in a letter to shareholders.

Roku makes streaming dongles and owns a streaming platform and channel. It went public in 2017 and its stock has been one of the hottest of the year, up 360% in 2019. That compares with gains around 23% and 18% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.32%  and the Dow Jones Industrial /zigman2/quotes/210598065/realtime DJIA -0.38%  , respectively, in the same period.

The company was under some strain, however, from increased competition, including Apple Inc.’s /zigman2/quotes/202934861/composite AAPL -1.40%   recently launched Apple TV+. Roku also faces fierce competition from Amazon.com Inc.’s /zigman2/quotes/210331248/composite AMZN -0.12%  Fire TV and Alphabet Inc.’s /zigman2/quotes/202490156/composite GOOGL +0.27%   /zigman2/quotes/205453964/composite GOOG +0.22%  Google’s Chromecast.

During a conference call with analysts following the quarterly report Wednesday, Wood said an avalanche of content with the launch of new streaming services from Apple and Walt Disney Co. /zigman2/quotes/203410047/composite DIS -0.98%  will hike net additions to active Roku accounts, bolstering ad revenue in the process.

The fourth quarter is typically Roku’s strongest. Analysts polled by FactSet expect a much-narrower loss (4 cents a share) and significantly higher revenue ($386 million) for the December quarter.

/zigman2/quotes/205087179/composite
US : U.S.: Nasdaq
$ 145.54
+1.28 +0.89%
Volume: 12.59M
Dec. 9, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$17.98 billion
Rev. per Employee
$668,322
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,135.96
-9.95 -0.32%
Volume: 1.60B
Dec. 9, 2019 5:16p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,909.60
-105.46 -0.38%
Volume: 219.07M
Dec. 9, 2019 5:16p
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 266.92
-3.79 -1.40%
Volume: 32.18M
Dec. 9, 2019 4:00p
P/E Ratio
22.52
Dividend Yield
1.15%
Market Cap
$1186.00 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,749.51
-2.09 -0.12%
Volume: 2.50M
Dec. 9, 2019 4:00p
P/E Ratio
77.46
Dividend Yield
N/A
Market Cap
$867.40 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,342.99
+3.60 +0.27%
Volume: 1.56M
Dec. 9, 2019 4:00p
P/E Ratio
28.82
Dividend Yield
N/A
Market Cap
$863.78 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/205453964/composite
US : U.S.: Nasdaq
$ 1,343.56
+2.94 +0.22%
Volume: 1.36M
Dec. 9, 2019 4:00p
P/E Ratio
28.83
Dividend Yield
N/A
Market Cap
$864.15 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/203410047/composite
US : U.S.: NYSE
$ 146.21
-1.45 -0.98%
Volume: 11.64M
Dec. 9, 2019 6:30p
P/E Ratio
21.01
Dividend Yield
1.20%
Market Cap
$263.53 billion
Rev. per Employee
$295,532
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Claudia Assis is a San Francisco-based reporter for MarketWatch. Follow her on Twitter @ClaudiaAssisMW. Jon Swartz is a senior reporter for MarketWatch in San Francisco, covering many of the biggest players in tech, including Netflix, Facebook and Google. Jon has covered technology for more than 20 years, and previously worked for Barron's and USA Today. Follow him on Twitter @jswartz.

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