Roku stock surged Wednesday after the streaming video platform predicted better-than-expected revenue this quarter and announced a restructuring to lower costs.
Before the opening bell, Roku provided a financial update for the current quarter. The San Jose, Calif.-based company now expects revenue of $835 million to $875 million, or up 10% to 15% year over year. It previously predicted revenue of $815 million, up 7%, for the third quarter.
Roku says it now expects to post an adjusted loss of $20 million to $40 million, vs. its prior outlook for a $50 million loss.
In addition, Roku said it is taking one-time charges of $260 million to $330 million related to a corporate restructuring. The company is reducing its head count by 10% and consolidating office space. It also is cutting its content portfolio and other expenses.
Roku Stock Jumps On News
On the stock market today, Roku stock jumped as much as 14.5% to 95.84. Shares closed 2.9% higher to 86.19.
"Given the challenging environment Roku continues to operate in, we view the company's decision to attempt to further cut its operating expense growth as a positive," William Blair analyst Ralph Schackart said in a note to clients. He rates Roku stock as outperform.
Roku is taking prudent steps to lower its expenses as it waits for a rebound in advertising spending, Schackart says.
Meanwhile, Roku ranks fourth out of 21 stocks in IBD's Leisure-Movies & Related industry group, according to IBD Stock Checkup. Roku stock has an IBD Composite Rating of 74 out of 99.
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