What is Next After Roku Earnings Send Stock Higher

Roku (NASDAQ:ROKU) enjoyed a rally to new highs for the year after reporting second-quarter results. The company lost less than thought while revenue is now at a $1 billion annualized rate.

Roku reported a $0.08 GAAP EPS loss in Q2. Revenue grew 59.5% Y/Y to $250.1 million. The stock touched ~$128 after the report, due to the short squeeze. With 10.4% of the float short, bears will have to close the bearish bet against the company. The active account level is so high that it is now in one in every five households in the U.S. ARPU grew a solid 88% in the two years since the company went public.

Roku is clearly an IPO success story. Its ad business is growing because of its strong first-party customer relationships that scale. Precision ad targeting, unique sponsorships, OTT, and access to premium inventory all drive ad sales on the platform. The Roku OS build clearly creates value for advertisers and content distributors.

Growth Ahead

Roku believes it still in the early stages of a secular shift in the way consumers consume content. Shifting from TV to OTT is happening fast and the company is taking market share. Unless Roku gets bought out, this company’s stock will easily move well above the $113 downside price target analysts assigned (per tipranks).