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Why Roku Stock Fell Sharply on Friday

By Daniel Sparks – Jan 7, 2022 at 2:15PM

Key Points

  • A key Roku executive is stepping down.
  • The news comes at a time when Wall Street is worried about intensifying competition for the streaming-TV company.
  • Shares have been hammered recently, sliding 58% in the past six months.

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Shares have slid more than 20% this week.

What happened

Shares of streaming-TV specialist Roku (ROKU -3.53%) fell sharply on Friday. The stock declined as much as 7.9% but recovered slightly and was down 6.6% as of 1:25 p.m. ET.

The stock's decline is likely primarily due to news that a key executive, Roku's head of its platform business, is stepping down. 

People watching sports on a TV.

Image source: Getty Images.

So what

On Friday morning, Roku announced that Scott Rosenberg, the senior vice president and general manager of its fast-growing platform business, will be stepping down "sometime in the spring of 2022." 

Rosenberg has played a pivotal role in Roku's growth as the company made the transition from being a hardware company to one that earns most of its revenue from its platform business (mainly from its share of subscription and advertising sales revenue on its operating system).

In Roku's third quarter of 2021, platform revenue rose 82% year over year to $582.5 million. This represented the bulk of the company's $680 million of revenue during the period.

"While Scott remains deeply invested in the company's success, he's ready for his next professional challenge and believes this is the right time frame for him to make a change," CEO Anthony Wood said.

Now what

Rosenberg is committed to a smooth transition, including helping the company with the recruitment process. He will also continue leading teams he was already in charge of until his departure.

It's been a tough week for Roku stock. Shares tumbled on Wednesday after Atlantic Equities said the company faces diminishing prospects amid heated competition, particularly from Alphabet (GOOG -1.65%) (GOOGL -1.40%) and Amazon (AMZN -0.82%)

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Roku. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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