Investors are Betting Against Roku – Are They Wrong?

By Novak Bozovic / December 27, 2017

Providing new and engaging content as fast as possible is of paramount importance in today's entertainment industry. No wonder then that more and more media streaming services are springing into existence. The competition is strong and diverse and that situation on the market provides a good soil for the wise to reap a good yield.

One of the relatively new media streaming companies, Roku, has been one of the most prominent winners in its short run as a company traded by the public. The pioneer in the field of media streaming services celebrated after a 15% increase in stock value in the last week alone.

Roku - A New Player In The Media Streaming Game

This is a digital media streaming device that allows you to play music, videos, and other entertaining content. It can come in different forms - as a set-top box, or as a service built into a TV set. Nonetheless, all of Roku’s devices give you access to all of the biggest providers of digital entertainment worldwide. A big reason why this company's popularity skyrocketed is that it is service-agnostic. It is not a streaming service in itself, but it puts thousands of different providers on your plate.

Roku Lineup

In the ages where every bigger media company is establishing a premium streaming service, Roku is making smart moves. Its plan is not to be territorial, but to be there for the growing user base of new cord-cutting media providers. Even if there is turmoil among the big players, Roku will most probably continue to thrive and do business well.

Roku's Upward Trajectory

This media company has been on the steady rise for 7 weeks straight before it reached a plateau and dropped in the last week. On the stock market, momentum can be a double-edged sword. However, the one thing that is working in Roku's favor is its open-ended future. When it comes to Roku's hardware sales, the profits have been low this year. However, its revenue is still increasing. This is due to the fact that the user-base of Roku is still well on the rise.

Before you decide to eliminate Roku from the market, take into consideration the growth of active accounts. Active accounts have gone up 48% in the last year, whereas the average profit from one user has skyrocketed 37%. The hours of active streaming have soared 58%, so it seems that the 16.7 million active users of Roku are not planning to give up on it anytime soon.

Roku Set Top Boxes

Are Roku's Impressive Gains Sustainable?

Unfortunately, nothing lasts forever. The current pace of the company's success is not sustainable. The chance that the market will quadruple again in the next three months is almost nonexistent. However, that does not mean that you should bet against it. On the contrary, its open-ended nature should support this theory. Momentum is hard to beat, and that is something that is clearly going in Roku's favor these days.

Twenty-First Century Fox Not Giving Up On Roku

Twenty-First Century Fox not giving up on Roku is definitely worth mentioning. It had no issue selling its 30% part in Hulu to Disney as part of the huge asset sale, a move that will surge Disney's stake in that streaming service to 60%.

The fact that Roku is one of the very few assets a giant such as Twenty-First Century Fox will cling to means that it sees something that others possibly don't. It sees a steady future growth and a possible big surprise on the way.

Final Thoughts

In the game where competition is hectic, companies that offer fresh and versatile service usually profit the most.

Would you bet in Roku's favor, or on the contrary, against it? Have you used it before and what do you think about it? Share with us!

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