🚅 The Unstoppable Roku!

Roku’s revenue grew 73% Y-o-Y

Nov 13, 2020

Hey Global Investor, here's what you need to know before the US markets open.

Market Snapshot 📈

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The Unstoppable Roku!

Roku’s revenue grew 73% Y-o-Y in the better-than-expected Q3.

Background: Roku was founded in 2002 by Anthony Wood. Roku and Netflix were collaborating in 2007 on “Project Griffin,” and were a few days away from launching Netflix Player device. This was Netflix’s Watch Instantly video service. They had spent years perfecting the hardware and software for Griffin.

CEO Reed Hastings pulled the plug on it at the last minute since he didn’t want Netflix to be seen as a competitor to hardware makers. In his view, having a company-branded set-top box would prevent the streaming service from appearing on other set-top boxes. Hastings decided to spin-off the “Griffin Box” to Roku. This was a genius move that made Netflix the streaming powerhouse it is today. Griffin Box became the first iteration of Roku’s set-top box.

Roku allows you to watch free and paid video content on your TV via the internet. Much like installing apps on your smartphone, you download “channels” onto your Roku device that provide you with various movies and TV shows.

Fast forward September 2017, Roku went public on the Nasdaq exchange with an IPO price of $14 per share.

What Happened? Roku’s Q3 results easily beat Wall Street consensus.

Key Numbers

EPS: +$0.09 vs -$0.40 expected
Revenue: $452M vs $366M expected

2.9M incremental active accounts added in Q3 to reach 46M in total.

People stuck at home due to the pandemic hopped on to Roku’s in-house entertainment and binged on movies and TV series. Moreover, the company is also benefitting from the shift in viewing away from conventional TV channels as people cut the cord on their TV subscriptions. Roku expects Q4 revenue to grow in the mid-40% range on a Y-o-Y basis but didn’t give formal guidance.

Market Reaction: Roku stock closed at $230.90 on Thursday, down 0.23%

Company Snapshot 📈

ROKU $230.90 -0.53 (0.23%)

Analyst Rating (25 Ratings) BUY 64% HOLD 28% SELL 8%

Newsworthy 📰

Not Bad, eh!: Disney shares rise after reporting 73 million paid Disney+ subscribers, losses not as drastic as expected (DIS - 1.67%)
Ice Breaker: Palantir reports 52% sales growth in first earnings statement since public market debut (PLTR -8.90%)
Shaky Start: Unity stock falls in first earnings since IPO after it reports loss (U -3.64%)

Later Today 🕒

6.00 PM IST: Producer price index
7.30 PM IST: Consumer sentiment index
Before Market Open: Spectrum Brands Holdings Inc Earnings (SPB)
Before Market Open: Vasta Platform Ltd Earnings (VSTA)

Fun Fact of The Day 🌞

Tennis players are not allowed to swear when they are playing in Wimbledon.

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