Roku Reports Mixed Q4; 2022 Guidance Includes Weak Top Line and Elevated Spending

Roku posted a mixed end to 2021 but shares fell over 20% in aftermarket trading on Feb. 17 due to weak 2022 revenue growth guidance of 35%, significantly below the 55% mark posted in 2021. Management also noted that the firm expects to ramp up operating expense spending that was pulled back in 2021 due to COVID-19 uncertainties. As a result, management expects 2022 adjusted EBITDA to be flat with 2020 on an absolute basis, implying a $300 million drop from 2021. While we view the EBITDA guidance as conservative, we are slashing our fair value estimate to $150 from $195 to account for lower top-line growth and much slower margin expansion.