Here's Why Roku Will Surpass $100 In Next Two Years
Summary
With 22 million subscribers, Roku now rivals Comcast as the second largest distributor of content in the United States.
80% of time of OTT viewing is spent on catalog programming vs. costly original programming. Roku's ad-supported business model fights highly fragmented subscription fatigue.
Global is where Roku will become a large-cap phenom in the future. The low cost platform combined with over 5,000 channels today serves global markets like no competitor can.
Roku's (ROKU) stock is getting a lot of attention after it reported stellar second-quarter results due to 57% year-over-year revenue growth to $156.8 million beating the analyst forecast of $141 million. Compare this to 37% year-over-year revenue growth in Q1. However, as I stated in my Q1 article, the platform revenue is where Roku will continue to see a majority of the gains. The video streaming platform revenue was up 96% during the period to $90.3 million with player revenue up 24% to $66.5 million.
Some of the analysis below is taken from an article I wrote last quarter on Seeking Alpha. The information has not changed, but the stock price is beginning to adjust to Roku's product-market fit. I do expect some correction from today's stock pop, but these fundamentals are why I've been long on Roku from the beginning (and beating out Amazon Fire Stick isn't one of them). I do expect Roku to experience some volatility on its path to becoming a large cap stock, however, specific industry trends are supporting Roku, and ultimately, these trends will win out.
1. Blood In The Water:
Roku offers the most synonymous business model with cable and satellite TV providers and can capitalize long-term on this massive subscriber loss by leveraging its advertising, audience development, and content distribution services, which make up 89% of gross margins from the platform. In fact, if Roku was a traditional cable company, this quarter's 22 million active subscriber base would rival Comcast (CMCSA) for the place of second largest distributor of content in the United States. Only AT&T (NYSE:T) has more with 47 million DirecTV subscribers.
With 22 million subscribers, Roku now rivals Comcast as the second largest distributor of content in the United States.
80% of time of OTT viewing is spent on catalog programming vs. costly original programming. Roku's ad-supported business model fights highly fragmented subscription fatigue.
Global is where Roku will become a large-cap phenom in the future. The low cost platform combined with over 5,000 channels today serves global markets like no competitor can.
Roku's (ROKU) stock is getting a lot of attention after it reported stellar second-quarter results due to 57% year-over-year revenue growth to $156.8 million beating the analyst forecast of $141 million. Compare this to 37% year-over-year revenue growth in Q1. However, as I stated in my Q1 article, the platform revenue is where Roku will continue to see a majority of the gains. The video streaming platform revenue was up 96% during the period to $90.3 million with player revenue up 24% to $66.5 million.
Some of the analysis below is taken from an article I wrote last quarter on Seeking Alpha. The information has not changed, but the stock price is beginning to adjust to Roku's product-market fit. I do expect some correction from today's stock pop, but these fundamentals are why I've been long on Roku from the beginning (and beating out Amazon Fire Stick isn't one of them). I do expect Roku to experience some volatility on its path to becoming a large cap stock, however, specific industry trends are supporting Roku, and ultimately, these trends will win out.
1. Blood In The Water:
Roku offers the most synonymous business model with cable and satellite TV providers and can capitalize long-term on this massive subscriber loss by leveraging its advertising, audience development, and content distribution services, which make up 89% of gross margins from the platform. In fact, if Roku was a traditional cable company, this quarter's 22 million active subscriber base would rival Comcast (CMCSA) for the place of second largest distributor of content in the United States. Only AT&T (NYSE:T) has more with 47 million DirecTV subscribers.
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