Roku IPO - Avoid Big Time With Netflix Uncertainty And Increased Competition

Increasing ARPU and revenue mix shift are two big positives.

The company has a strong relationship with Netflix but gets minimal revenue.

Its contract with Netflix has not been renewed and could be a major loss.

IPO coming several years too late for a streaming company.

Streaming device leader Roku (NASDAQ:ROKU) is set to go public for the first time this week. While there is a lot of hype around the company and the IPO, there are also some huge risks and red flags in the filing. Roku is doing a good job increasing its user base and also monetizing it better. However, several key risks are coming soon, and the IPO looks like a major miss here.

The Offering

Roku will offer (S-1) 15,668,000 shares at an expected pricing of $12-14. The company is selling nine million shares itself and also selling shares from several current stakeholders. The primary purpose of the IPO is to provide financial flexibility and also to create a public market for the company’s shares.


It’s apparent from the first line of the offering that the company has a nice history of being an early pioneer. “We pioneered streaming to the TV,” reads the filing. Roku lists its mission as being the streaming platform that connects the entire TV ecosystem. The company took an early lead in the streaming race and was an early adopter of providing Netflix (NASDAQ:NFLX) to customers. Times have changed, and Roku now faces competition and is seeing Netflix provide minimal revenue and have other means to get in front of customers’ eyes.

sources: https://seekingalpha.com/article/4110115-roku-ipo-avoid-big-time-netflix-uncertainty-increased-competition

https://www.servicedonline.com/



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