What happened
Shares of Roku (ROKU 0.67%) plunged on Friday after the digital media platform warned of slowing growth. As of 2 p.m. ET today, Roku's stock price was down more than 25%.
NASDAQ: ROKU
Key Data Points
So what
Roku's revenue rose 33% year over year to $865.3 million in the fourth quarter. The company's active accounts climbed 17% to 60.1 million. The number of hours streamed on its platform, in turn, increased 15% to 19.5 billion.
Additionally, Roku's advertising-fueled monetization efforts helped its average revenue per user (ARPU) rise 43% to $41.03.
Wall Street, however, was expecting an even stronger performance. Revenue fell short of the consensus analyst estimate of $894 million.
Roku also issued tepid guidance. The company expects to grow revenue by 25% year over year, to $720 million, and generate adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $55 million. Analysts had projected revenue and adjusted EBITDA of $748.5 million and $79.2 million, respectively.
Image source: Getty Images.
Now what
Roku's growth is clearly decelerating. A combination of easing coronavirus-related restrictions, supply chain challenges, and intensifying competition is taking a heavy toll.
As more people return to outdoor activities, they're likely to spend less time watching TV. Meanwhile, chip shortages are denting TV sales. More worrisome is fierce competition from Amazon, which launched a new line of smart TVs in September.
Moreover, the current market environment has been brutal for premium-priced growth stocks, particularly those that have seen their pace of expansion slow as the pandemic subsides. Roku is now squarely in that camp, and today's steep decline in its share price reflects that new reality.
