ROKU stock plunged 16% in early trading on Thursday despite Roku (NASDAQ:ROKU) reporting better than expected Q3. The company bottom- and top-line were better than Wall Street estimates in the quarter.

Roku’s Q3 Revenue Beats Analyst Estimates

In the third quarter, analysts had expected a loss per share of $0.28, but Roku posted a net loss of $0.22 per share. Roku reported a 50% YoY revenue growth to $260.9 million, up from $173.4 million. Analysts expected revenue for the quarter to be around $256.4 million.

The number of active user accounts also increased from 30.5 million to 32.3 million. Streaming hours increased significantly by around 68% to 10.3 billion. On average, revenue per user was $22.58 compared to Q2’s metric of around $21.06.

In its earnings call on Wednesday, the company indicated that it is looking to expand its operations to the South and North American markets. Roku is targeting the launch of its TV models in the United Kingdom by the end of next year.

Although the company raised its 2019 guidance, its midpoint revenue for 2019 was below Wall Street estimates. The company indicated that it expects $1.06 billion, missing on analysts’ projections of $1.1 billion. Investors were unimpressed with the guidance, which led to the tanking of shares.

ROKU stock is down 16% at $118.40.

Roku Focusing on Ad Revenue

The platform business segment recorded a growth of 79% from last year to $179.3 million. The company doesn’t rely on subscription charges but instead, focuses on generating advertising revenue from partners.

>> Uber Stock Hits All-Time Low on Expiration of Lock-Up Period

Management indicated that Roku has continued to execute its strategy well as the TV market changes to streaming. Roku’s competitive differentiation and business momentum make it an essential partner for advertisers and publishers.

There are new streaming services launching on Roku’s platform as well as the number of advertisers. The company announced in October that it will be hosting the Apple TV+ and the Apple TV app on its platform.

Recently, Roku acquired tech company Dataxu, and it expects this acquisition to drive revenue growth. The tech company, acquired for $150 million, allows marketers to purchase video ad campaigns.

ROKU stock has soared 270% since the beginning of this year.

Featured image: DepositPhotos © davidewingphoto