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Why Roku's founder isn't fazed by $1 billion of its market value being wiped out

Brian Sozzi

Staying focused on the longer-term prize has worked well for Anthony Wood since he founded Roku in 2002.

So why change that mindset now after seeing $1 billion of Roku’s market value wiped away after a seemingly strong third quarter? Sure, the fast-growing provider of streaming media could cut costs to juice profits for a quarter and appease Wall Street. But doing so would likely come at the expense of Wood’s desire to be the facilitator of the growing cord-cutting movement.

“We had a great quarter — the fundamentals are great,” Wood told Yahoo Finance on ‘Midday Movers.’ “There is still huge room to grow as folks transition to streaming media from linear media.”

The market might have forgotten about that one on Thursday.

Roku shares were hammered by 22% after the company showed slowing growth in platform sales, active accounts added and average revenue per user. For a company that has put up shocking growth rates since going public in September 2017, any hint of a cooldown would naturally be viewed negatively by the market.

Lost in the shuffle is that Roku beat Wall Street’s estimates on earnings, sales and the number of new accounts added.

With Roku (ROKU) still at the forefront of streaming right alongside Netflix (NFLX), investors may now have a rare opportunity to get into the company at much more attractive levels.

“Roku has built an exceptional platform on the back of its players, and now as it expands in the rapidly growing Smart TV category, it is positioning itself as the best in class option for OTT advertising. Roku has significant opportunities ahead with international expansion, particularly as The Roku Channel is now available on third-party Smart TVs and the web,” said Michael Pachter, a Wedbush analyst, after the earnings report.

And to those constantly looking for Wood — who owns 21 million Roku shares — to sell out to the likes of Netflix, Apple or Disney, it’s still a no go. Wood told Yahoo Finance he remains focused on growing Roku to its fullest potential when asked if he should sell the company.

Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi

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