Can Roku Survive Against Heavy Competition?
Roku Inc. had a strong first day as it went public on Thursday, seeing shares rise by about 70 percent after pricing at the high range.
The company has well-founded ambitions to become a service provider on top of its streaming players.
While competition with larger tech giants will be challenging, Roku’s commitment to innovation and ability to survive so far are good signs.
Investors should feel good about Roku’s long termpotential, though it will be better to wait until the end of the year.
Thursday was a good first day for Roku Inc. (NASDAQ:ROKU) as its IPO got off to a strong start. As The Washington Post reports, Roku raised $219 million on opening day, with its shares priced at $14, but that rocketed up to $23.50 per share by end of trading.
However, a good first day hardly means that Roku is guaranteed to do well in the long term, as anyone watching the Snap (NYSE:SNAP) stock can tell you. And many analysts are fretting about how Roku will manage to stay competitive with behemoths such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOGL) who could all theoretically drive Roku out of business with a snap of a finger.
But such fears are overblown. Roku has managed to survive against those companies up to now, is a constant innovator, and its numbers are generally trending in the right direction. While investors may be wary of tech IPOs after watching companies like Snap and Blue Apron struggle, there are reasons to believe that Roku will be different.
Becoming a Service Provider
Roku is best known for its streaming player and cell amplifier which allows customers to watch Hulu, Netflix (NASDAQ:NFLX), and other streaming services directly on their televisions. According to its own SEC report, around 75 percent of Roku’s 2016 revenue came from its streaming player. Growth has been modest, rising from $270 million in the 2015 fiscal year to $293 million in 2016.
But while streaming players may currently make up the majority of Roku’s business, MarketWatch noted that Roku “no longer thinks those gadgets are the key to its Wall Street success.” Instead, Roku sees its future in what it calls its platform revenue, which it describes as “primarily from advertising and subscription revenue share on our platform.” This includes taking a cut of subscriptions purchased through Roku devices.
sources:https://seekingalpha.com/article/4110734-can-roku-survive-heavy-competition
The company has well-founded ambitions to become a service provider on top of its streaming players.
While competition with larger tech giants will be challenging, Roku’s commitment to innovation and ability to survive so far are good signs.
Investors should feel good about Roku’s long termpotential, though it will be better to wait until the end of the year.
Thursday was a good first day for Roku Inc. (NASDAQ:ROKU) as its IPO got off to a strong start. As The Washington Post reports, Roku raised $219 million on opening day, with its shares priced at $14, but that rocketed up to $23.50 per share by end of trading.
However, a good first day hardly means that Roku is guaranteed to do well in the long term, as anyone watching the Snap (NYSE:SNAP) stock can tell you. And many analysts are fretting about how Roku will manage to stay competitive with behemoths such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOGL) who could all theoretically drive Roku out of business with a snap of a finger.
But such fears are overblown. Roku has managed to survive against those companies up to now, is a constant innovator, and its numbers are generally trending in the right direction. While investors may be wary of tech IPOs after watching companies like Snap and Blue Apron struggle, there are reasons to believe that Roku will be different.
Becoming a Service Provider
Roku is best known for its streaming player and cell amplifier which allows customers to watch Hulu, Netflix (NASDAQ:NFLX), and other streaming services directly on their televisions. According to its own SEC report, around 75 percent of Roku’s 2016 revenue came from its streaming player. Growth has been modest, rising from $270 million in the 2015 fiscal year to $293 million in 2016.
But while streaming players may currently make up the majority of Roku’s business, MarketWatch noted that Roku “no longer thinks those gadgets are the key to its Wall Street success.” Instead, Roku sees its future in what it calls its platform revenue, which it describes as “primarily from advertising and subscription revenue share on our platform.” This includes taking a cut of subscriptions purchased through Roku devices.
sources:https://seekingalpha.com/article/4110734-can-roku-survive-heavy-competition
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