top partner

for CFD

What happened

Shares of connected-TV platform company Roku (NASDAQ: ROKU) soared on Wednesday after the company filed an unscheduled report. The report included increased financial guidance for the upcoming third quarter of 2023. And it also included some new measures to reduce expenses and boost profitability.

Initially, the market seemed to really like this update as Roku stock traded as much as 15% higher early in the session. But as of 10:40 a.m. ET, the stock was still up 7%.

So what

Roku’s Q3 expectations are now substantially higher than they were back in July. In the second quarter, management guided for Q3 revenue of $815 million. Now it expects revenue of $835 million to $875 million, which would represent strong 10% to 15% year-over-year growth.

Roku also expects smaller losses for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). It guided for an adjusted EBITDA loss of $50 million but now it thinks its loss will only be $20 million to $40 million.

Higher growth and lower losses combined to excite the market today.

Now what

There are asterisks on this news from Roku. First, the company is laying off roughly 10% of its workers, which will carry one-time severance expenses. And it’s expecting impairment charges because it’s consolidating office space. Finally, it’s also cutting back on streaming video content, which also has a one-time cost.

Adding it all up, Roku is looking at up to $330 million in one-time expenses related to today’s news. Its Q3 adjusted EBITDA guidance excludes these charges. Therefore, investors will need to adjust their expectations regarding the timing of Roku’s improved unadjusted profitability. It may not tangibly show up this year.

10 stocks we like better than Roku
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Roku wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 5, 2023

Jon Quast has positions in Roku. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.

Read the full story: Read More“>

Blog powered by G6

Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.

For any inquiries, please contact [email protected]