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Why Roku Stock Soared 21.7% Thursday

By Daniel Sparks – Updated Aug 8, 2019 at 10:50AM

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Here are the metrics sending shares of the streaming media player maker through the roof.

What happened

Shares of streaming-TV platform specialist Roku (ROKU -0.76%) skyrocketed at market open on Thursday, jumping as much as 21.7%. As of 9:38 a.m. EDT, the stock was up 20.5%.

The stock's gain follows Roku's second-quarter results. The bullish move is no surprise, as the company's revenue and loss per share were both much better than expected.

A group of young people watching TV

Image source: Getty Images.

So what

Roku's second-quarter revenue surged 59% year over year -- an acceleration from 51% revenue growth in Q1. This put the company's top line at $250.1 million, ahead of both management's guidance range for revenue between $220 million and $225 million, and analysts' average revenue forecast of $224 million. 

The company's loss per share was $0.08, down from breakeven in the year-ago quarter but better than analysts' consensus estimate for a loss of $0.22.

"Continued strong execution against our strategic plan led to a great quarter," said management in the company's second-quarter shareholder letter. "We achieved two significant milestones: active accounts passed 30 million and [average revenue per user] surpassed $20."

Now what

The company lifted its full-year outlook, with the midpoint of its new 2019 revenue forecast range at $1.085 billion, up from a previous midpoint of $1.04 billion.

"For 2019, we remain confident in our outlook for reaching over $1 billion in revenue," management explained, "with our raised outlook representing roughly 40% year-over-year growth at the midpoint, up from 36% year-over-year in our prior outlook."

Roku also raised its forecasts for gross profit and adjusted EBITDA.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Roku. The Motley Fool has a disclosure policy.

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