Roku stock slides after it says it will sell up to 1 million shares

Key Points
  • Roku announced Tuesday it plans to sell up to 1 million shares of common stock.
  • The company says it will use the proceeds to cover operating expenses and capital expenditures, as well as to fund any future acquisitions.
People pass by a video sign display with the logo for Roku, a Fox-backed video streaming firm, that held it's IPO at the Nasdaq Marketsite in New York, September 28, 2017.
Brendan McDermid | Reuters

Shares of Roku fell 3.8% on Tuesday after the company said it plans to offer up to 1 million shares of common stock.

Roku has entered into a distribution agreement with Citigroup to conduct the offering, under which it plans to sell up to 1 million shares of common stock "from time to time," according to a filing with the U.S. Securities and Exchange Commission.

The company said it will use the proceeds to fund capital expenditures and operating expenses associated with running the business, including marketing activities and repayment of debt, among other purposes. It said the proceeds could also be used to "acquire or invest in businesses, products and technologies" that complement the company, but that it has no commitments to do so currently.

Roku also disclosed in the filing that some shareholders would be selling up to 571,459 shares as part of an agreement tied to its acquisition of ad tech company Dataxu. The deal, first announced in October, closed earlier this month.

It comes as Roku shares have been on a tear so far this year, surging more than 400% year to date. Analysts have largely remained bullish on the stock due to its potential for massive user growth overseas and potential for future partnerships with streaming providers. Last month, Roku announced Apple's Apple TV app would be available on its platform.

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