Roku shares drop after weak earnings outlook

Shares of Roku that manufactures streaming media players and is incorporated in some TVs saw its shares drop more than 20 percent on Thursday morning.

Roku

Roku was founded back in October of 2002 by Anthony Wood. Roku means "six" in Japanese. Roku was the sixth company that Wood had founded.

The company rose to prominence with its streaming stick that plugs into a USB port. Roku is available in Canada as well as the U.S.

Roku forecast weak first quarter of 2018

The sharp drop was due to a weaker-than-expected forecast for the first quarter of this year.

Roku predicted that it will bring in $120 to $130 million in revenue for the quarter whereas the estimate of Wall Street was $132 million. However, the company's prediction took into account a new revenue recognition standard which may have had an impact on its figures it said when releasing its earnings forecast.

Roku still did well last quarter

In spite of the weaker forecast Roku actually beat Wall Street earning estimate last quarter. It had adjusted earnings of $0.06 per share on revenue of $188.3 million. Analysts had estimated it would lose $0.10 on revenue of just $182.5 million.

Roku stock went public last September and has tripled in value since then but as of Thursday it was $40.39 per share down 23.18 percent this year. It remains to be seen if the company can boost its earnings during following quarters but right now investors appear not to have confidence in the firm.

Previously published in Digital Journal