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Roku Shares Jump on Preliminary Q1 Earnings, Surge In New Subscribers

support@smarteranalyst.com (Ben Mahaney)

Streaming platform Roku (ROKU) has now updated its Q1:20 guidance, revealing that in late Q1 the “shelter at home” regulation resulted in an acceleration in account growth and an increase in viewing. Shares in ROKU rose 4.4% in Monday’s trading, while the S&P 500 dropped 1%.

Specifically, Roku estimates Q1 Active Accounts at 39.8 million (up 37% year-over-year vs. 36% in Q4) implying roughly 3 million net additions, with Q1 streaming hours at 13.2 billion (up 49% Y/Y vs. 60% in Q1).

The company also withdrew its FY20 guidance on April 13, citing broader business and macro uncertainties arising from the COVID-19.

“We believe that the strength in Active Accounts and Streaming Hours is consistent with the broader industry trends in growing engagement and streaming hours (NFLX, SPOT, DIS) during the COVID Crisis” comments RBC Capital analyst Mark Mahaney.

On the news he marginally lowered his ROKU price target to $139 from $142, citing the withdrawal of financial guidance.

Read more: Roku Launches UK Channel, Shares Soar 10%

Management also revised its prior Q1 Revenue and Gross Profit guide while keeping its EBITDA and Net Income guidance unchanged. Roku is now guiding Q1 Revenue to range between $307 – $317 million (vs. $300 – $310 million prior), with EBITDA of ($23) – ($18) million and Net Income of ($60) – ($55) million.

“While we expect some marketers to pause or reduce ad investments in the near term, we believe that the targeted and measurable TV ads and unique sponsorship capabilities that Roku offers are highly beneficial to brands today” stated ROKU CEO Anthony Wood.

Overall, the stock shows a Moderate Buy analyst consensus on TipRanks. Meanwhile the $132 average analyst price target indicates further upside potential of 37%. (See ROKU’s Stock Analysis on TipRanks).

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