Roku shares spiked and the company raised its first quarter guidance due to increased traffic during the coronavirus pandemic.

Video Transcript

MYLES UDLAND: All right, let's move on and talk about some individual news we've got. So Jen mentioned we've got the beginning of earnings season, but we're also seeing numerous preannouncements of earnings and one of the companies coming out and saying how it thinks its results will look in the current quarter.

That's Roku. That stock is up nearly 11% today, up about 10 and a half percent. The company coming out last night after the close, interesting move here. So it pulls its guidance for the full year, but comes out, Dan Roberts, and really paints a picture of everything is a lot better than they thought it would be in the sense that first quarter streaming hours up 49%. And I think we talk so often about the Amazon, Netflix at home trade. I guess, maybe in our mistake, we'd overlooked Roku as a big part of this group.

DAN ROBERTS: Well, I don't know if we've overlooked it overall. I mean, I feel like we are always sounding the drum or beating the drum, so to speak, that as long as streaming is hot, Roku is hot. I mean, Roku has the pipes for a lot of people and also in a good strategic position because not competing with the others on original content.

I mean, Roku is just the hub that hosts the other apps. And in fact, personally, I have a Roku myself. I once had an Apple TV. That became really old. When I went to upgrade, I switched over to Roku. So we use Roku as the portal to access all the things we're watching.

So of course, streaming hours are up at this time. And by the way, raising the outlook for the first quarter, you don't hear that right now from many other companies. Now, of course, putting on hold the outlook for the full year, but expects higher revenue in Q1 than originally projected. So that's pretty good.

Now that said, I think there's a big caveat here, which is that as we talk about all the time, Roku is really also an ad selling business, right? I mean, it charges these other TV apps a fee to be on Roku. But it also sells ads. And there's an important distinction to note, which is that Roku sells its ad inventory 30 days in advance.

So I think while March looked OK for ad sales on Roku, April is going to be a problem. And actually, it echoes what I heard today. I was speaking to a number of small businesses for a story about PPP loans, which you can talk about later in the show. But many of them sounded a similar tone where they said March wasn't necessarily so brutal for us. We were down 20%, 30%.

Of course, that's very bad. But April is when they expect it to really be brutal because in March, you still had the overhang of contracts or deals or agreements that were already in place. So similarly, I do think that this time could end up being damaging to Roku because of a lack of ad sales coming soon.

MYLES UDLAND: Yeah, and as you mentioned earlier, I mean, even Facebook is coming out and saying that their ad business is impacted by this. You know, smaller downstream players like Roku, certainly going to feel the pinch there.