Streaming services supplier Roku (NASDAQ:ROKU) is now more than double where shares were at during the Dec. 2018 selloff. Revenue and earnings beat consensus estimates. Is there anymore upside in the stock after such a strong performance?
Roku earned $0.05 a share as revenue grew a solid 46% to $275.7 million. The profit is notable because Roku just IPO’d a year and a half ago.
Roku investors now have profit numbers to look at in valuing the stock. The strong revenue growth rate is sustainable because cord-cutting will lead to consumers shifting from cable boxes and old LCD TVs to streaming services on either a Roku box or a smart TV. Roku’s penetration in the smart TV space only adds to its market share for Roku TV.
For now, Roku TV is free as it builds its viewership. In time, the audience will be big enough for the firm to upsell premium content. This will increase its profit margin, assuming Roku keeps its content costs low.
Roku is more attractive than Apple (NASDAQ:AAPL) or Google stock. Apple has no real play in streaming television yet while Google’s YouTube Red is unable to compete with Amazon.com’s (NASDAQ:AMZN) Prime, HBO, or Netflix (NASDAQ:NFLX). Though investors missed the rally, Roku could continue to perform well this year if it sustains the strong growth.
