Roku Shares Retreat After Rally With Pandemic Hitting Ads

(Bloomberg) -- Roku Inc. shares fell in extended trading on Thursday after the video-streaming company acknowledged that the pandemic was slowing growth in its advertising business, even as it projected ad budgets will accelerate a shift toward streaming.

Shares fell about 9% after the market closed, although this comes after a pronounced move higher in recent weeks. The stock had more than doubled off a March low after closing with a 7.8% gain in Thursday’s regular trading session.

“We’ve seen an acceleration in building scale and user engagement, but some marketers have pulled back, and we’re not immune to those cancellations,” Steve Louden, the company’s chief financial officer, said in an interview. “The expectation is for the ad business to grow at a slower rate, but still substantially on a year-over-year basis.”

Roku posted 39.8 million active accounts in the quarter and reported 13.2 billion streaming hours, in line with preliminary results issued in mid-April. Bloomberg Consensus data had pointed to about 39.5 million active accounts and 13.13 billion streaming hours.

The company also reported a net loss of 45 cents a share and revenue of $320.8 million. Wall Street had been looking for an adjusted loss of 47 cents per share and revenue of $311.9 million, according to data compiled by Bloomberg. Roku scrapped its 2020 forecast last month.

In a letter to shareholders published on Roku’s website, the company wrote that “overall advertising expenditure in the U.S. is likely to fall in 2020,” although stay-at-home orders and increased unemployment “appear to have accelerated the shift from linear TV viewing to streaming during the past few weeks.”

In December, Louden announced plans to step down once he helps the company hire his successor. He said the search for a replacement was ongoing, although it had “slightly slowed down” as a result of the pandemic.

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