Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Why Does Roku Stock Keep Climbing Higher?

Published 11/12/2017, 11:49 PM
Updated 07/09/2023, 06:31 AM

Shares of Roku, Inc. (NASDAQ:ROKU) soared more than 10% on Monday morning, extending the new stock’s strong post-earnings run and signaling that Wall Street remains bullish on the company’s latest moves.

Last week, Roku posted its first earnings report as a publicly-traded company. The video streaming hardware brand posted a non-GAAP, pro forma loss of 10 cents per share, which was an improvement from the 17 cent loss posted in the prior-year quarter.

Roku also saw revenue figures of $124.782 million, up from the $89.053 witnessed in the year-ago period. Roku said that $67.254 million of this revenue was from sales of its players, while $57.528 came from its streaming platform.

Investors also reacted favorably to the news that Roku had recently acquired Dynastrom, a Danish firm focused on multi-room audio software. While Roku management has not specifically said how the company plans to use Dynastrom, many people assumed the buyout was a step towards developing a smart speaker (also read: Roku Stock Climbs After Possible Smart Speaker Acquisition).

“We are always looking to expand our engineering team, and the addition of Dynastrom allows us to scale the team further,” said a Roku spokesperson in a statement. “They will continue operations in Denmark as a subsidiary of Roku Inc. We are not disclosing any additional details related to the transaction.”

Roku did not announce how much it spent for the Danish firm, but the company did reveal an unspecified $3.5 million acquisition in a regulatory filing last week. And with in-home assistants from Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) in high demand, it makes sense that investors are excited about the potential for new hardware from Roku.

In the wake of the company’s first earnings report, and on the back of this bullish acquisition news, shares of Roku exploded last week. After closing at $18.84 per share on the day of its report, the stock closed at $33.25 per share, or about 76% higher, on Friday afternoon.

Thanks to several more bullish headlines, that strong momentum continued into Monday morning. For one, investors are giddy over Roku’s new partnership with Indian film behemoth Eros International (NYSE:EROS) .

In a press release published on Monday morning, Roku and Eros announced that Roku devices will now be able to stream Eros Now’s massive library of Bollywood and regional language films, TV shows, and original content for just $7.99 per month.

“We are happy to collaborate with a leading streaming innovator like Roku and continue our global expansion to provide seamless user experience. Eros Now’s extensive premium content can now reach millions of homes across North America and the UK through the Roku platform,” said Eros Digital CEO Rishika Lulla Singh.

Furthermore, Roku released its official Black Friday deals this week, and it looks like the company’s devices will be one of the best streaming hardware options this holiday season. For instance, the Roku Streaming Stick Plus, which includes 4K capabilities, will sell for just $50 at retailers around the country this Black Friday.

The video streaming industry is still booming, and although users have more hardware options than ever, Roku has already established itself as a leading brand. Roku management, industry analysts, and individual investors also appear to be optimistic about the company’s ability to monetize its streaming platform in the future.

By shoring up new revenue streams while its core products are still in-demand, Roku is positioning itself well right now.

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.

See This Ticker Free >>, Inc. (AMZN): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

Eros International PLC (EROS): Free Stock Analysis Report

Roku, Inc. (ROKU): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.