Roku Shares Plummet 23% as Wall Street Sours on 2024 Outlook

Eileen AJ Connelly
·2 min read
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Shares of Roku plunged more than 23% in morning trading Friday after the smart TV operating system company warned that this year will be “challenging” amid a slowdown in spending in the entertainment industry.

The stock plummeted $21.62, or 22.9% to $72.88, wiping out all of its gains since November, when its quarterly report fueled a solid run-up.

After the market closed Thursday, Roku reported a net loss of $78.3 million, or 55 cents per share, on $984.4 million in revenue for the 2023 fourth quarter, besting analyst expectations across all of those metrics. The company also saw active accounts rise by 4.2 million during the quarter a leap of 14% from last year.

But the company’s outlook and comments made during the conference call had investors hitting the sell button as analysts downgraded the stock and cut growth expectations.

Macquarie analyst Tim Nollen lowered his price target to $88 from $93, according to financial data provider TheFly.com, though he kept an “Outperform,” or “Buy,” rating on the stock. The price target implies he expects the share price to fall over the next year.

Nollen characterized the fourth quarter results as “impressive” and said guidance for the current quarter was solid, but pointed to concerns about the platform’s growth and high operating costs for the remainder of the year in a research note.

Oppenheimer downgraded Roku to” Perform,” or “Hold” from “Outperform” or “Buy,” without a price target, according to TheFly.com. The note predicted little growth for the stock until platform revenue growth expands, noting that advertising and efforts to raise subscription prices are expected to struggle for most of this year.

A report that Walmart is in talks to acquire TV maker Vizio likely also pressured Roku stock. Roku entered the TV market with branded HD and 4K TVs last year.

Pivotal Research also lowered its price target, to lowered the firm’s price target on Roku to $75 from $85 and kept a “Hold” rating on the stock, citing rising competition.

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