Roku Inc (NASDAQ:ROKU) Stock in Focus After The Earnings

 Roku Inc (NASDAQ:ROKU) recently released its Quarter 1 results and impressed the investor, thereby leading to a rise in its stock. The company reported active accounts at 39.8 million till March, marking an increase by almost 3 million users since December end.

The Q1 streaming hours also increased by 49% (to 13.2 billion hours) from the previous year’s figure. The streaming hours in 2019, Q1, had stood at 8.9 billion while the active accounts in the period had been reported to be 29.1 million (305.4 hours streaming per active account). In the previous quarter, the streaming hours per active account had been accounted to be 331.6 hours.

Post Crisis, Roku Stock Might Move Higher

However, the company’s revenue from advertising could get reduced in the near future due to the COVID-19 pandemic crisis. Despite this, the company’s CEO, Anthony Wood, remains optimistic about the long-term prospects of the company. The company has been working towards reflecting on the new patterns of viewing ads and adjusting to the new marketing mix with the advertisers. The CEO acknowledged that some advertisers might reduce their investments in Roku in the near future, but the unique sponsorship capabilities provided by Roku remains highly beneficial for brands.

Coming to its competitor Netflix, the company reported a 22.8% year-over-year increase in its global paid memberships in Quarter 1 to a figure of 182.86 million. There were 15.77 million new subscribers as compared to Quarter 4 figures, thus surpassing the analysts’ expectations by almost double. But the stock still didn’t do as well. One of the reasons behind this is the increasing competition in the industry.

With new entrants entering the market, the challenges are increasing significantly. These new entrants include Peacock, HBO Max (being launched in the coming month), Disney plus, etc. While Netflix might have added 2.31 million net subscribers alone in the US and Canada in Q1, the question remains whether these subscribers would convert into long-term viewers or not.

Netflix has to hope that its content is good enough for subscribers to continue paying the monthly subscription fees. Roku, on the other hand, provides not only paid content but free content as well to its users. This makes Roku users more likely to stay tuned. Advertisers, thus, might stick to Roku, given the growth stats of the company.

About Travis Garlick 1752 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.