shares crater on ‘recession fears’

The Roku 3 streaming player menu is displayed on a television in Los Angeles, California, U.S., Thursday, September 12, 2013.

Patrick T. Fallon | Bloomberg via Getty Images

Roku shares fell more than 25% in extended trading Thursday after the company missed expectations for higher and lower results for its second quarter and warned of “an economic environment defined by fears of recession “.

Here’s how the company did it:

  • Earnings: Loss of 82 cents per share vs. expected loss of 69 cents, according to Refinitv.
  • Revenue: $764 million vs $805 million expected, according to Refinitv.

The company attributed its poor financial performance to macroeconomic conditions, including inflation, as well as supply chain issues.

Roku added that the advertising market will continue to suffer in the current quarter and consumer spending will moderate, which could hurt the sales business of Roku TV and related hardware devices. The company said it cut operating expenses and slowed its workforce growth in the second quarter.

“We believe this pullback reflects the onset of the pandemic in 2020, when marketers prepared for macroeconomic uncertainties by rapidly cutting ad spend across all platforms,” ​​Roku said in a letter to shareholders.

Additionally, Roku missed its forecast and said it would generate $700 million in revenue in the third quarter, well below the $902 million estimated by analysts polled by Refinitiv.

Due to market volatility, Roku said it was withdrawing its full-year growth estimate.

The company said advertisers cut spending on TV ads in the quarter, highlighting how fears of a recession are pushing companies to cut back on marketing.

Meta, for example, this week reported poor second-quarter financial results in which executives blamed “macroeconomic uncertainty” and a “weak advertising demand environment” that will last through the current quarter.

Snap and Twitter, which both rely on online advertising, also flagged weak finances and cited a tough ad market that doesn’t appear to be recovering any time soon.

This story is developing.

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