The writer of piece Ryan Michael Downey has no stock or financial relationship with Roku.
Is Roku a dangerous stock? There are a number of financial publications available via the web. And most of them have contributors who fancy themselves experts on stocks and such. The stock market is not an exact science and sometimes one can make a bad call almost as easily as a good call especially on a new product or stock. But there is one segment of contributors that I run across regularly that get it wrong almost every time. It’s the ones who talk about Roku. Whether it is a total lack of product understanding or an undying need to write clickbait headlines there are always stories abounding about how Roku’s stock is dangerous or that it could take a dive and such. This is what people don’t understand about Roku.
- Roku is not a streaming company. It is a platform. This is something CEO Anthony Wood has said since the product hit the market. Roku is a smart TV platform that allows users to access internet-based video content via streaming. Its platform is integrated into its media players (boxes and dongles), its new soundbars and countless brands of TV’s. It makes revenue by selling advertising, selling the license for its platform to partners and by selling the aforementioned boxes and dongles. Netflix is a streaming company. It produces content distributed on a streaming app on streaming platforms. Yes, Roku has a Roku channel app. It is an app that pulls content from its streaming app partners and puts it into one place. It does not compete with Netflix for titles.
- Roku is the most popular streaming platform by far. It was the first to the market as far as dedicated streaming devices. It set a standard that all other companies had to copy. And a lot of products have tried to compete and failed, even when backed by more established companies. There was a time when every new device, Fire TV, Chromecast, New Apple TV, Vudu Box, Logitech Review, WD Player etc would be called a Roku killer. Roku never died. Not only was it the first to market with streaming players, but it was also the first amongst its main competitors to get on TV’s as an OS. Apple still has not found its way in.
- Roku is the most popular device amongst cord-cutters. In its latest earnings report, Roku said its own research indicates 50% of cord-cutters with a streaming device own a Roku device. The rest of them are split amongst at least 7 different platforms.
- Roku is not a cord-cutting device. Roku powered boxes and TV’s are popular with cord-cutters but it does not mean that everyone who owns one has stopped paying for the “traditional” bundle. Roku is a major partner to the biggest names in pay-TV offering TV everywhere apps as well as apps designed to act as a partner to a traditional cable box. And let’s get real here. The vast majority of internet video traffic is still YouTube and Netflix. And if the numbers of people who utilize Roku primarily for those services were actually cord-cutters, than the pay-TV industry would be history already.
- Its reach will likely grow. Roku has 12 TV partners at the moment and regularly market 5-7 different streaming devices at a wide price range. Its products are found at every big box tech store and many general big box stores, some of whom eschew Amazon products because they see them as a competitor. Apple products are primarily found at their own branded stores. Roku’s TV partners include very well-known value brands like RCA and Sharp and are easily accessible at stores like Walmart which means you can buy one anywhere.
- You will be able to get seemingly any premium service available with Roku. At the moment, Amazon has yet to come to an agreement with Disney for its new Disney+ service. The company also had a famous feud with Google that resulted in YouTube not being available on its devices as well as YouTube TV. Roku rarely if ever has this kind of problem. Like Pop’s Barbershop in Luke Cage Roku is the streaming world’s version of Sweden. Aside from a lack of YouTube very early on in the life of Roku products and a special marketing agreement when HBO Now first launched between Apple and HBO, Roku never wants for a major app. It is one of the first platforms to feature the Apple TV app ahead of Amazon and Android TV, and is already a partner for Disney+ at launch. It features every single (legally) available cable replacement service on the market. it features every on-demand video store on the market Google Play, Amazon, Vudu etc. None of the other products on the market can say so. And its universal search is the best in the business for finding the best prices and options amongst the numerous streaming stores.
- It is really easy to use
I am not a stock analyst. So do not bo blow your retirement on my observations. But what I can tell you is that the company seems to have a very good feel for the industry and is growing every year. I’ve watched it wade the waters in an unpredictable ocean and seen it cut right through. It may not make it in the long run. Most companies get sold, merge or go out of business. If that happens it will not be because it made the wrong move.