Audience numbers mean everything. The surge in viewership numbers from Roku (NASDAQ:ROKU) and Netflix (NASDAQ:NFLX) continues to pressure the traditional cable markets and movie studios. Although traditional players like Disney (NYSE:DIS), Comcast (NASDAQ:CMCSA), and Fox Corporation (NASDAQ:FOX) are recovering, investors should consider holding Roku and Netflix shares instead.
In its Q2 report posted on Aug. 5, the company’s revenue grew 42%. Platform revenue grew 46% to $244.8 million while player revenue rose 35% to $111.3M. Active accounts are a key metric, up 41% to 43%. The pandemic shifts consumer behavior, keeping people glued to the television. Streaming hours rose an incredible 65% to $14.6 billion.
For a few weeks, ROKU stock stalled because the company said the ad industry outlook for the third and fourth quarters would be uncertain.
Such a negative tone sets the stage for Roku management beating expectations for the rest of the year. Preventing the coronavirus spread by limiting group sizes is beneficial for Roku. With no outdoor activities, movie theatre openings at 100% capacity, and other things to do, consumers are watching content through Roku. Advertisers must increase their limited budgets on the platform. This would maximize their audience reach.
Careful content selection and investments in the original content are driving Netflix demand. Roku can count on ad revenue and a growing audience base.
