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Roku stock plummets after earnings; Snap, Twitter shares slide amid backlash


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Roku stock plummets after earnings; Snap, Twitter shares slide amid backlash

Roku Inc.'s shares plummeted after the company provided a bleak outlook in its latest quarterly earnings report, placing the stock among the biggest decliners in the technology, media and telecommunications space for the week ended Feb. 23.

Meanwhile, social media giants Snap Inc. and Twitter Inc. also saw some negative sentiment following recent changes to the companies' platforms that stirred strong reactions from some users.

While Roku beat Wall Street revenue estimates during its fourth quarter 2017, several analysts revised their first-quarter revenue estimates lower after the company gave weaker-than-expected guidance Feb. 21. Roku said it expects to report first-quarter 2018 revenue of between $120 million to $130 million and a net loss between $21 million and $15 million.

As of Feb. 23, the S&P Capital IQ consensus estimate for Roku's first-quarter revenue was $127.68 million and the 2018 net income estimate predicted a net loss of $46.46 million on a GAAP basis.

Roku shares closed at $41.52 on Feb. 23, down nearly 14% from their Feb. 16 closing price.

In the social media sphere, Snap's stock fell nearly 7% on Feb. 22 after the company received pushback about a recent update to its Snapchat app, which some users have complained they find confusing and difficult to use. The update was the target of an online petition drive calling for Snap to roll its app back to the prior version.

Snap responded Feb. 20 to the petition by promising a new update to help users "uncomfortable" with the changes better sort information to align with their personal preferences. The petition had garnered nearly 1.2 million signers as of the end of the week. Celebrity Kylie Jenner also jumped into the mix, posting tweets Feb. 21 that were critical of the Snapchat update and suggesting the app's usage was falling.

Snap's shares closed at $17.45 on Feb. 23, down about 14.5% from the prior week's close.

Meanwhile, Twitter's shares fell almost 4% Feb. 22, the day after the company announced new rules designed to crack down on using automated software or "bots" that are allegedly used to make tweets go viral or to spread false news.

The rules specifically ban users from posting identical messages or content from multiple accounts, or from simultaneously performing tasks such as liking, retweeting or following from multiple accounts. Exceptions are made for apps used to share weather, emergency or public service announcements.

A hashtag #twitterlockout was being used by some users critical of Twitter's new rules and its impact on their accounts, with some accusing the company of censoring conservative voices in particular.

The stock downside was moderated on the one-week chart, however: Twitter's shares closed at $32.66 on Feb. 23, down about 1.2% from their Feb. 16 closing price.

Turning to communications, DISH Network Corp. also saw its shares slide during the week. The company Feb. 21 reported its latest quarter earnings and provided more detail on its wireless network building plans.

In a Form 10-K filing, DISH said it expects to spend between $500 million and $1.0 billion on its wireless projects through 2020. During a Feb. 21 earnings conference call, DISH Executive Vice President of Corporate Development Thomas Cullen said the estimate includes both capital and operating expenditures and will begin to be recorded in 2018, though "the bulk of it" will be seen in 2019. Some of these expenditures will also occur in 2020, he said.

Since 2008, DISH has directly or indirectly spent more than $21 billion on wireless spectrum licenses and investments. DISH plans to utilize this spectrum through a two-phase network build-out plan. The first phase involves a narrowband network specialized for low power machine-to-machine communications. This network will be designed to support the internet of things. The second phase will be to layer in next-generation 5G connectivity as the technology advances and hardware becomes available.

Moody's on Feb. 21 placed all ratings for DISH and its subsidiary DISH DBS Corp. on review for downgrade. The review followed the company's declining trends in operating performance, including the secular pressure on satellite pay TV subscriptions and on EBITDA. The ratings put on review for downgrade included the Ba3 corporate family rating and its Ba3 senior unsecured debt ratings, the rating agency said.

DISH shares closed at $44.48 on Feb. 23, down about 2.7% from the Feb. 16 close.

Media streaming service Pandora Media Inc.'s shares also slid Feb. 21 after the company posted a net loss for its most recent quarter, despite a significant boost in subscription revenue. The company Feb. 21 reported subscription revenue growth of about 63% year over year during the fourth quarter 2017, but it delivered a net loss of $44.7 million. That compared to a net loss of $90 million on a GAAP basis in the year-ago quarter.

Pandora's stock closed at $4.31 on Feb. 23, down about 16.5% from its Feb. 16 closing price.