By Angela Palumbo

Roku stock was sinking after the streaming-device company cut its financial guidance, saying the uncertain economic environment is hurting revenue from both streaming devices and advertising.

Roku reported an adjusted first-quarter loss of 19 cents a share after the stock market closed on Thursday, while the consensus call among analysts polled by FactSet was for a loss of 26 cents. Revenue was $1.02 billion, while analysts expected $1.01 billion.

Nevertheless, the stock fell 10% to $60.78 on Friday. It has lost 18% this year, compared with the 3.5% decline of the S&P 500.

Management said it now expects full-year revenue of $4.55 billion, compared with the $4.61 billion it predicted in its fourth-quarter earnings release. Wall Street expected full-year revenue of $4.58 billion.

The company also said it expects second-quarter revenue of $1.07 billion, compared with Wall Street's estimates of $1.09 billion.

Roku sells devices that put streaming apps on a user's television. Last quarter, Roku said it expected devices revenue to grow 12% from the previous year in 2025. On Thursday, the company said "while tariff-related impacts to our Devices segment remain difficult to predict, we expect Devices revenue and gross profit loss to remain consistent with 2024 levels."

At the same time. President Donald Trump's tariffs have left companies unsure of what the economic environment will look like in the months to come. Roku management said on a call to discuss the results that it is starting to see advertisers shifting their budgets as a result. Other tech companies, including Snap, Alphabet and Meta Platforms, have made similar comments this earnings season.

"While we remain confident in Roku's ability to create opportunities in this environment with its treasure trove of user data, uncertainty on advertising budgets could linger until tariffs are removed," Wedbush analyst Alicia Reese wrote in a note on Friday. She rates Roku as Outperform with a $100 price target.

There could be one bright spot for Roku, though. CEO Anthony Wood said on the call that advertisers have been shifting their focus to streaming channels from traditional TV

"The good news for ROKU is the move to streaming is a wind at the back of results and if anything the move to streaming could accelerate in a potential weakening economy as consumers look to save money," Pivotal Research Group analyst Jeffrey Wlodarczak wrote on Thursday. He lowered his price target on Roku to $100 from $125, and continues to rate the stock as a Buy.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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May 02, 2025 11:42 ET (15:42 GMT)

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