Roku CEO Tries To Explain Why The Street Is Wrong

Roku Inc ROKU's fourth quarter results sent shares tumbling lower by 20 percent Thursday. CEO Anthony Wood laid out the case why investors are wrong in selling the stock.

What You Need To Know

Roku reported "really strong, fantastic" quarter, Wood told CNBC, highlighted by a 44 percent growth in active accounts to more than 19 million. He said if Roku was a traditional cable company, it would be the third largest distributor of content in the United States.

Investors may have also found fault in Roku's guidance as some metrics, like first quarter revenue, fell short of the consensus estimates. Wood said the company's outlook is "strong" as its gross profit at the midpoint to be up 56 percent.

"It's a great time to be in the streaming business and Roku is extremely well positioned," Wood said.

Why It's Important

Roku's stock performance on a day-to-day basis is based on many factors, Wood told CNBC's David Faber when asked about the stock's big drop. The company is "no doubt front-and-center" in the huge shift towards streaming video and this is management's main focus.

Morgan Stanley's Benjamin Swinburne said in a research report it's likely total streaming video hours per average active account slowed to a mid-single-digit growth rate in the quarter. Wood said in 2017, one out of every five new TVs sold in the U.S. included a built-in Roku operating system. As such, many consumers buy a Roku-powered TV not necessarily for the Roku platform, which would explain the lower usage from some new accounts.

What's Next?

Roku's management team will continue focusing on its game plan of building its total active accounts and then monetize its user base, Wood told CNBC. For the time being at least, there are no plans for the company to create its own original content.

"Our focus is on helping our partners build their audience for their streaming content as they shift their distribution from traditional TV to streaming," Wood said. "We are focused on building tools to allow our partners to build large audiences."

At time of publication, Roku's stock was down 16.7 percent at $42.56.

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Photo courtesy of Roku.