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Roku Stock Falls on Lower Sales Outlook Amid Supply Chain Woes

Roku shares fall after indicating fourth-quarter sales will be tepid amid slowing TV sales that incorporate its streaming service due to supply chain issues.

Roku  (ROKU) - Get Roku, Inc. Class A Report shares fell Thursday after the streaming entertainment provider reported third-quarter earnings that beat forecasts but revenue that missed expectations as TV sales that incorporate its streaming service slowed due to supply chain issues.

The company also said it expects lower sales and earnings in the fourth quarter as struggling TV sales due to lack of inventory continue to impact its bottom line.

Roku reported third-quarter net income of $68.9 million, or 48 cents a share, after the closing bell on Wednesday, well ahead of the 9-cent-a-share forecast by analysts polled by FactSet. However, revenue came in at $680 million, below Wall Street estimates of $684 million.

In its shareholder letter, Roku said the sales deceleration was a knock-on effect of “global supply chain disruptions that have impacted the U.S. TV market.” The company expects those disruptions to continue into 2022 and impact product pricing, availability, and advertising during the holiday season.

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Indeed, for the fourth quarter, Roku said it expects to see revenue of between $885 million and $900 million, with its bottom-line figure ranging from a $5 million net loss to $5 million net income. Analysts polled by FactSet had been expecting fourth-quarter revenue of $946 million and net income of $33 million.

“Looking ahead, our business fundamentals remain strong but we are mindful that the challenges created by the global supply chain disruptions will likely continue into 2022,” CEO Anthony Wood and CFO Steve Louden wrote in the shareholder letter. 

“These headwinds may have a broad impact on the holiday season in terms of consumer confidence, product pricing and availability, and advertising spend levels.”

At last check, shares of Roku were down 4.89% at $299.34. Year to date the stock is down 6.15%