Roku stock jumped on Thursday after the streaming video platform smashed estimates for new users and revenue in the fourth quarter.
The San Jose, Calif.-based company late Wednesday said it added 4.6 million new active accounts in the holiday quarter, bringing its total to 70 million. Analysts had expected 3.04 million new users in the period.
However, Roku lost $1.70 a share on sales of $867 million in the fourth quarter amid a difficult advertising climate. Analysts had predicted Roku would lose $1.72 a share on sales of $803 million. In the year-earlier period, Roku earned 17 cents a share on sales of $865 million.
Roku's platform revenue, mostly advertising sales, rose 5% to $731.3 million in the December quarter. Meanwhile, its hardware sales dropped 18% to $135.8 million.
For the current quarter, Roku forecast total revenue of $700 million, down 5% from the same period last year. But that topped Wall Street's goal of $692 million for the first quarter. In the year-ago quarter, Roku generated $734 million in sales.
Roku Focused On Return To Profitability
On the stock market today, Roku stock surged 11.2% to close at 70.57. During the regular session Wednesday, Roku stock rocketed 12.1% to 63.49.
"Through a combination of operating expense control and revenue growth, we are committed to a path that delivers positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for full year 2024," Chief Executive Anthony Wood and Chief Financial Officer Steve Louden said in a letter to shareholders.
They added, "Our platform and industry leadership positions us well for reaccelerated revenue growth as the ad market recovers and the shift to TV streaming continues."
Analysts Debate Roku's Outlook
Wedbush Securities analyst Alicia Reese reiterated her outperform rating on Roku stock after the quarterly report. She also raised her 12-month price target to 80 from 75.
"Roku is building its platform for global dominance, and is in the heavy investment phase," she said in a note to clients.
Reese added, "Once macroeconomic trends improve, Roku is poised to return to meaningful profitability as a platform and FAST (free, ad-supported television) channel leader."
However, Pivotal Research Group analyst Jeffrey Wlodarczak kept his sell rating on Roku stock on Thursday. But he raised his price target to 55 from 40.
"First quarter 2023 will mark four quarters in a row of pretty ugly results," he said in a note to clients. "The outlook remains choppy for Roku going forward, which we do not believe is properly reflected in the current valuation."
Roku Stock Has Poor Composite Rating
Roku stock ranks ninth out of 21 stocks in IBD's Leisure-Movies & Related industry group, according to IBD Stock Checkup. It has a poor IBD Composite Rating of 31 out of 99.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use score. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
