Roku shares crater after company misses on earnings and warns of ‘recessionary fears’

The Roku 3 television streaming player menu is shown on a television in Los Angeles, California, U.S., on Thursday, Sept. 12, 2013.

The company missed expectations on the top and bottom lines for its second quarter and warned of an economic environment defined by recessionary fears.

The company did what it was supposed to.

• Earnings: Loss of 82 cents per share vs a loss of 69 cents expected, according to Refinitv.
• Revenue: $764 million vs $805 million expected, according to Refinitv.

Inflation as well as supply chain issues were blamed for the company's poor financial performance.

The company said that the advertising market will continue to suffer in the current quarter, and that consumer spend will moderate, which could hurt the company's business. In the second quarter, the company trimmed operating expenses.

In a letter to shareholders, Roku said that it was similar to the start of the pandemic in 2020 when marketers quickly reduced ad spend across all platforms.

The company missed on its guidance and said that it would bring in $700 million in revenue, well below the $902 million that analysts were estimating.

The full-year growth estimate has been withdrawn because of market fluctuations.

According to the company, advertisers stopped spending on television advertisements during the quarter due to fears of a recession.

Meta reported poor second quarter financial results this week in which executives blamed "macro economic uncertainty" and a "weak advertising demand environment" that will last through the current quarter.

A tough advertising market that doesn't seem to be recovering anytime soon was cited as the reason for the weak financials of the two companies.

The story is getting better.