top of page
  • Writer's pictureLisaS

ROKU Valuation High, But ROKU Benefits From Streaming Video Wars More Than Any Other Company


Roku, Inc (NASD: ROKU)


Consensus EPS Estimate for FQ3 2019 is -$.26 (+119.17% YoY)

Consensus Revenue Estimate for FQ3 2019 is $257.62M (+48.59% YoY)

EPS Revisions the past 90 days include 2 upward and 9 downward

Revenue Revisions the past 90 days include 11 upward and 1 downward


ROKU is a neutral based streaming TV platform. It has been a huge beneficiary of the increased competition in streaming video. The company reports revenue in two segments; Platform and Player. The Platform division has been the growth engine for the company and allows users to access movies, TV, live sports, music, news and more. Revenues in the most recent quarter grew 86% YoY. The company has over 30 million active accounts. It earns revenue through content distribution agreements, video ads, brand sponsorships, and audience marketplace. The Player division revenue grew 24% YoY and is where the company sells, and licenses TVs under the Roku TV name as well as offers streaming media players under the Roku brand name as well as selling branded channel buttons on remote controls.


Recently ROKU announced the acquisition of dataxu for $150m in cash and stock. This self-automated technology complements ROKU’s existing ad platform and will allow the company the ability to offer a single way for customers to plan, buy and optimize video ad campaigns across its platform and players. It is expected to close in Q4 2019.


ROKU is up YTD 355.52% and is up 31.36% for the Month. ROKU reports earnings 11/6/2019 AMC. Over the last four quarters, ROKU has beaten earnings estimates four times. In our opinion, ROKU will beat earnings and revenue estimates and will raise guidance again. ROKU maintains strong momentum heading into the end of the year. The company has been reinvesting all its gross profits back in its business to strengthen its competitive advantages. Thus, the company’s operating expenses have also been rising as it has invested in talent, sales and marketing, technology, product development, and facility costs. It gave a heads up to expect a large sequential increase in operating expenses for Q3 and gave its guidance around an $8m EBITDA loss as its midpoint as well as $37m net income loss. The Player division appears very strong, just look on Amazon or Walmart for ROKU TVs as a guide. The Platform division revenues have been characterized by the company as lumpy quarter to quarter in terms of how revenue from content distribution agreements are recognized. Given all of the new streaming platforms (Apple TV+, Disney+, AT&T TV Now, Sling TV, Hulu+, PlayStation Vue, YouTube TV and more) that are launching over Q4 19 and Q1 20, we would not expect to be disappointed and this is also being mindful of the rising threat of larger companies like Comcast Xfinity Flex streaming box rollout and the Facebook Portal TV streaming device. We have not even addressed ROKU’s plans for International yet.

Implied volatilities on ROKU options this week imply an 18.71% movement (+/- 20.26 points) up or down, which gives us a range of 160 on the upside and 120 on the downside.


We will be looking to trade this in our live trading group! Come Join Us Today!

170 views
bottom of page