Roku Plunges 24% on Forecast for Loss, Shrinking Ad Budgets

Rob Golum, Bloomberg News

A Roku Inc. signage on a Smart television in an arranged photograph in Hastings-on-Hudson, New York, U.S., on Sunday, May 2, 2021. Roku Inc. is scheduled to release earnings figures on May 6. Photographer: Tiffany Hagler-Geard/Bloomberg , Bloomberg

(Bloomberg) -- Roku Inc., the maker of set-top boxes consumers use to watch Netflix and other streaming services, slumped in late trading after forecasting a wider-than-expected fourth-quarter loss and saying advertisers’ budgets are under pressure.

The adjusted loss this quarter may come to $135 million before interest, taxes, depreciation and amortization, Roku said Wednesday. That’s three times the $45.5 million analysts were expecting.

Roku is the latest technology or media company to announce weakness in advertising sales. The company said it expects a tough economy to pressure consumers and advertiser spending through the holiday season.

“We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or rebound,” Roku said in a letter to shareholders.

The company forecasts fourth-quarter revenue of about $800 million, below the current $897 million average of analysts’ estimates.

Shares of San Jose, California-based Roku tumbled as low as $41.15 in extended trading after the company announced the forecast, along with third-quarter results. The stock closed at $54.32 in regular trading in New York and is down 76% this year.

The company plans to rein in expenses and slow hiring growth due to current conditions. It also said Chief Financial Officer Steve Louden plans to leave the company next year.

(Updates with company comment starting in first paragraph.)