Roku (NASDAQ: ROKU) is leading the connected television space and has had an impressive recovery after its stock dived below $84 in March. While it was a rough time for the company, which makes a number of digital media players for video streaming platforms, it bounced back by a huge 180% over the past 5 months. Here are the top reasons Roku’s stock will keep climbing:
The platform has seen an increase in users as many people stay inside and switch on their streaming devices during the pandemic. 14.6 billion hours were watched by Roku users for the second-quarter, a jump of 65% year-over-year.
Roku also reported 43 million active users at its recent earnings call, up 41% compared to the same time last year. The strong user numbers lead to $244.8 million in platform revenue for the second-quarter, a jump of 46% year-over-year.
The company makes most of its revenue through its subscriptions, advertising, and transaction accounts, which generates 70% of Roku’s total revenue. This is a great sign that Roku is on the right track to continue attracting more users in the near future and boost its revenue.
Shares increased by as much as 5% after Roku reported a 42% increase in revenue of $312 million at its recent earnings call. While the company didn’t turn a profit for the quarter, partly due to the continued losses in the midst of the streaming wars, however it is expected to improve in the coming months.
The company’s Roku Player unit sales increased by 28% year-over-year and segment sales also went up by 35% to $111.3 million. These strong sales were helped out by strong international markets and steady growth domestically.
Roku managed to raise around $350 million in additional equity capital and finished the recent quarter with $887 million of cash and equivalents. This puts the business in a good financial position and sales are set to go up as people continue to subscribe during the COVID-19 pandemic.
Its impressive user growth and financial position will likely be bolstered further as the business expands beyond the U.S. and Canada. Roku recently launched operations in over 20 countries, including the U.K, Brazil, and Mexico. The business also announced fifteen TV brands that come complete with Roku platform models which are now available on a global scale.
Roku predicts that around half of U.S. households with a TV will have never had traditional pay TV and that the global streaming market is expected to be worth around $687.2 billion by 2024. This allows a lot of room for the company to take hold of the market as it isn’t restricted to just one service.
Overall, Roku is on a steady path of recovery following its lows earlier in the year. If subscribers continue to increase at the rate they have over the past few months it will continue to post impressive revenue.
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Contributing Writer at MyWallSt
Alsha is a contributing writer to MyWallSt. Alsha’s favorite stock is Shopify because not only does she enjoy a bit of online shopping, but she believes the e-commerce solutions business is going to continue making big gains.