Important events
Jun 092022
Roku rides the rumor
The rumor mill was hard at work on Tuesday, grinding out some hot goss about the possibility of a big M&A deal in the streaming-verse.- Roku surged as much as 13% on Wednesday to hit a more than one month high, before closing up 9% after rumors started swirling that an acquisition of the streamer is on the way amid some internal employee speculation – hopes are pinned on Netflix as the buyer, which would be a BFD.
- Roku shut off its trading window for employees out of nowhere recently, sparking speculation that it’s preparing for a buyout. Roku has been struggling to keep up with competition in a tight labor market, with the stock down over 70% in the last year, so investors seem buzzed about the idea.
- Netflix needs to up its advertising game now that it’s announced a cheaper advertising-based subscription tier is on the way. Roku has an impressive and growing ad business that brought in $647m in revenue in Q1 so – on the surface at least – it seems there’s chemistry. Let’s see if the M&A gods make this happen.
Roku
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May 042022
Roku has Starz in its eyes
Roku is angling to add a Starz to its portfolio in the hopes that Lions Gate content will help it come out on top in the increasingly competitive streaming wars.- Roku wants to make a bid for a minority stake in Starz together with Apollo Global Management. Starz is owned by Lions Gate Entertainment, the studio that put out hits like Outlander and The Hunger Games franchise.
- It comes after Roku made a deal with Lions Gate last week to run the media company’s hit movies exclusively on Roku’s ad-supported platform.
- Lions Gate has long been expected to explore a sale of Starz after attempting one last year without success, and comes on the heels of a wave of consolidation in the streaming sphere – Amazon buying MGM, Discovery buying HBO, you get the gist.
Coline Haslé / Unsplash
May 022022
Roku takes investors on a rollercoaster ride
Another day of earnings, another streaming company struggling with subscribers.- Shares popped 7% in extended trading on Thursday before dropping, then popping back up, after missing on the bottom line but beating on the top. Roku reported LPS of $0.19 on revenues that were up 28% from last year at $734m.
- It’s seeing its active subscriber growth slow, much like most other platforms out there, even Netflix. The platform added 1.1m accounts in Q1 to total 61.3m, seeing a deceleration of growth as its hardware business declines for the third straight quarter.
- Still, Roku is bullish on the rest of the year, forecasting 25% growth in Q2 and 35% for the full year. However, it’s not unharmed by macroeconomic headwinds that are blowing everyone away, and sees no end to supply challenges and increased prices.
Claire Satera / Unsplash
Feb 182022
Roku gets rocked by earnings
Streaming media company Roku gets investors wishing they could fast forward through its rocky earnings report.Key points:
- The stock plunged 25% in Friday morning trading after posting a Q4 revenue miss, building on a loss of 10% on Thursday that came on the back of several bearish pre-earnings analyst downgrades – the stock is down around 70% from its July 2021 high.
- It beat on earnings expectations but missed on revenue, reporting EPS of $0.17 on revenues that were up 33% to hit $865.3m – revenue in the past two quarters increased 51% and 81% respectively, so growth is slowing big time. On the plus side, it reported 60.1m active accounts, up 17% y-o-y and beating estimates, though the number of hours people watched for declined.
- It issued paltry guidance, citing supply chain shortages while calling for $720m in Q1 revenue, representing growth of only 25%. TV sales are taking the brunt of the supply pain, still sitting at pre-pandemic levels with no sure path forward. Rising inflation sure ain’t helping either, making parts more expensive and causing consumers to watch their wallets.
Chris Briggs / Unsplash
Jan 062022
A streaming wars casualty
Roku investors are searching for the triage tent after prices take a hit from a strong streaming opposition.- Prices lost 12% on Wednesday, bleeding out all of its 2021 gains to hit its lowest closing price since November 2020.
- The shot from the grassy knoll came from an Atlantic Equities analyst, who says its growth prospects are dramatically limited by increasing saturation in the streaming market and growth from the likes of heavyweights like Google (GOOGL), Amazon (AMZN), and Samsung (005930).
- Roku has been trying to claim overseas territory after becoming the #1 selling smart TV operating system in the U.S., but Atlantic Equities doesn’t think it has what it takes to plant its flag elsewhere.
Illustration by TradingView
Dec 162021
Roku gets reprimanded by the ITC
Streaming giant Roku has investors switching channels after a patent battle gets messy.- Prices closed down nearly 8% on Wednesday after sinking 14% to their lowest level since October 2020.
- It lost a patent lawsuit against TV remote maker Universal Electronics, which claimed Roku stole its remote patented tech. The ITC agrees, and has banned the import of the products in question.
- Analysts piled on with a slew of downgrades, arguing that the market underestimates the amount of competition in the streaming space and pointing to declining subscriber numbers.
Illustration by TradingView
Dec 092021
A Roku rally
Investors are tuning in as streaming service Roku re-signs its multi year deal with Google (GOOGL).- Prices soared over 18% on Wednesday to a three-week high.
- Roku devices will keep offering YouTube as an app, re-signing their long-standing deal despite a long and public dispute.
- They were fighting over Google’s (GOOGL) onerous demands regarding data and advertising placements. If share prices are anything to go by, investors have deemed Roku the winner of the snafu – Google (GOOGL) shares stayed flat.
Jun 242021
Roku jumps on potential Comcast deal
Shares of Roku closed Wednesday up 4.5% on the back of rumors that telecoms giant Comcast is considering a deal.Media market consolidation has been the talk of the town in recent months, and now there is new speculation circling that digital media device provider Roku could be next. Shares of the firm bounced yesterday after rumors hit that Comcast (CMCSA) CEO Brian Roberts was looking to see how the company might fit into the streaming world. Similar deals have been popping up all over the place recently; AT&T (T) and Discovery (DISCA) recently joined forces, and Amazon (AMZN) is boosting content with its MGM acquisition – so clearly Comcast (CMCSA) is looking to stay on trend. Roku has got some competition though, because rumor has it that Roberts is also considering a potential tie-up with ViacomCBS.
In a plot twist however, Roberts is apparently also looking to actively compete with hardware players like Roku and Amazon by working with Walmart and Chinese manufacturer Hisense to create its own smart TV, which would run software developed by Comcast. If it happens it could be a nice little boost for subsidiary NBC’s own streaming app, Peacock, which has struggled to capture audience attention so far.
Roku shares had already seen some action earlier in the week, after an analyst increased the firm’s price target. Loop Capital Markets analyst Alan Gould is a fan, boosting his price target from $450 to $475, and crediting the company’s aggressive marketing tactics.
The stock, like most streaming companies, has benefited from the pandemic, and shares are still up 21% year to date.