Editor's Note: Our Communications analyst Andrew Freedman is hosting a call Tuesday August 27 at 10:00am ET to review our long thesis on ROKU and make a case for a +$200 stock in the next 12-24 months. If you are an institutional investor interested in accessing this call or related materials email email@example.com.
LONG ROKU (ROKU): +$200 Stock 12-24 months
We believe ROKU is well-positioned to capitalize on the ongoing decline in linear television as a platform/aggregator of streaming services with 30.5 million active accounts and leading share of OTT devices.
Our thematic view (Click Here for Black Book) is that more OTT entrants will accelerate the decline in Pay-TV, with Disney (DIS), WarnerMedia (T), Discovery (DISCA) and Comcast (CMCSA) launching streaming services in the next 12-18 months. ROKU is an enviable position to profit from legacy media joining the streaming wars through audience development/marketing, revenue share agreements, and advertising.
We have been doing a ton of work on ROKU over the last few months, which has increased our conviction in the strength of their competitive positioning and sustainability in the long-term growth. We believe ROKU is in the very early stages of monetizing their 30M (and growing) active users and see multiple levers that can drive upside to consensus estimates.
We are excited to be hosting a call on 8/27 at 10AM ET to present our work, run through the long thesis, and make a case for a +$200 stock in the next 12-24 months.
(An invite with access details will be sent to Hedgeye Communications subscribers prior to the call. If you are not currently a subscriber, please contact firstname.lastname@example.org for more information).
key presentation topics
(Included but not limited to)
- Research process
- Background / Financial summary
- Industry/ Trends (SVOD, AVOD, Ad-dollars)
- Competitive landscape
- How does ROKU make money?
- Video advertising/CPM impression model
- The Roku Channel ("TRC")
- Premium video subscriptions
- Audience development
- Addressable Market Analysis
- Deep-dive TV unit sales by OEM
- TV OS market share and installed base
- Smart-TV penetration by country
- Global market share of streaming devices
- Engagement Trends
- Time spent on the platform and by channel
- Channel popularity, reviews, and lineup
- AVOD vs. SVOD
- Key Performance Indicator Forecasts
- How high can ARPU go?
- What is the sustainable growth rate for active accounts?
- Revenue mix impact on gross margins
- Valuation, sentiment and risks
Please call or e-mail with any questions.
Andrew Freedman, CFA