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Analysis before buying or selling Roku shares

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To implement a reliable analysis of the Roku share price and adopt an effective trading strategy for this asset, we offer you the opportunity through this dedicated article to learn more about this company and its financial and economic environment. In this article you will be able to access quality information on the Roku group, its precise activities and sources of revenue as well as a presentation of its major competitors on the market and recent partnerships. We will thereby assist you in completing your fundamental analysis of this asset by indicating which current events and publications you should follow.

Elements to consider before selling or buying Roku shares

Analysis N°1

Firstly, we would pay careful attention to the pricing strategy implemented by Roku in this highly competitive sector. The group must in fact prove itself capable of adapting its offer to the market and the requirements of consumers.

Analysis N°2

We would also monitor the technological progress of Roku, particularly in the sector of Box TV where it is currently trying to position itself.

Analysis N°3

It is clear that all the partnerships implemented by the Roku group with the aim of increasing their offer or gaining visibility are also significant factors that should be monitored.

Analysis N°4

We would also follow the geographical development strategy of this group and the progress of its implantation on different international markets where it is not yet present or not sufficiently well represented.

Analysis N°5

Finally, we would of course take into account all the financial data from this company with its annual and half yearly financial accounts, its forecasts and objectives as well as free cash flow situation and various financial data.

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General presentation of Roku

We now offer you a more detailed presentation of the Roku Group together with its major activities.

Roku Inc. is an American company that operates a television streaming platform. It connects users to content and enables editors to continue creating content and monetise audiences and offers and announcers to engage the consumers.

The Roku platform is customisable by the user concerning the content selection with replacement offers for cable television and other streaming services adapted to the user’s budget and requirements.

Among the channels financed by advertising on the Roku platform we find CBS News, Crackle, the CW television network and Vice. The subscription channels include HBO, Hulu and Netflix and the payable television channels replacement services such as DirectTV, SlingTV and Sony Playstation Vue. There are also the transactional channels such as Amazon Video, Google Play and Vudu.

Concerning the categories of products offered by Roku we find advertising, Roku televisions, and streaming services. This company currently employs around 1,650 people around the world.

Analysis before buying or selling Roku shares
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The major competitors of Roku

We offer you now the opportunity to learn about the major competitors of Roku at the present time.

WarnerMedia

This company is an American multinational media and leisure conglomerate, the second largest company worldwide for television and cinematic production as well as leisure in terms of turnover.

NBC Universal Media LLC

This is another American media conglomerate which is a subsidiary of Comcast. It combines the activities of the groups Vivendi Universal Entertainment at the heart of NBC.

Amazon 

With its streaming service, the web giant Amazon is also a competitor of Roku.

Google 

This worldwide renowned American Group is also a competitor to Roku through its streaming offer and Chromecast. This group has been a subsidiary of the Alphabet Company since 2015.


The major partners of Roku

To conclude this article we offer you the opportunity to learn about some of Roku’s partners on the market with details of its most significant recent strategic alliances:

Deezer

In 2017 the group notably implemented a partnership with Deezer for the launch of a new channel on its platform. Deezer thereby became available for Roku clients in the United States and Latin America after its initial launch in France in 2015.

Hisense

In 2019 Roku also became associated with Hisense which thereby became responsible for the manufacture of Roku televisions for the British market. These are smart televisions at a low cost.

Apple

Finally, and still in 2019, Roku became associated with Apple in the form of a trade partnership aimed at promoting TV+ to rival the industry giant Disney+ through the launch of Apple TV+.

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Positive factors for Roku shares
The factors in favour of a rise in the Roku share price:

Knowing a company's strengths and weaknesses is essential if you want to effectively anticipate future trends. In order to know whether Roku's stock is likely to move up or down, you need to know how the company will perform in the face of potential events, opportunities or threats.

With regard to the advantages of the Roku Group, the following are some of the most important:

  • First of all, the group's revenue development is quite impressive and well above average, which positions it as a performance stock.
  • The group also has the largest share of the advertising market for streaming devices, especially against older competition.
  • The current trend of consumers switching from traditional cable TV services to streaming formats may create continued revenue growth for the Roku Group.
  • The group's gross margin has also grown significantly over the past two years, which may lead to a profit in just a few years.
  • The group's balance sheet is also particularly strong with 2.6 times more current assets than current liabilities and 1.9 times more total assets than total liabilities. Roku's cash position is also comfortable at $515 million, more than the $419 million in debt.
  • Roku Group could also benefit from global expansion in the coming years as there are many regions in which it could expand. This expansion will allow it to drive growth with greater revenue and market share.
  • Finally, the Roku Group regularly makes strategic acquisitions that can help it increase profitability. This was most recently the case with the acquisition of Dataxu, an on-demand platform that allows marketers to plan and buy video ads. The group can, of course, buy other complementary businesses to boost its growth.
Negative factors for Roku shares
The factors in favour of a drop in the Roku share price:

While Roku has many strengths to face the future calmly, the main ones are:

  • Significant losses have been recorded by the group in 2020 and 2021 although the accounts are on track to recover effectively in 2022.
  • The group also has significant expenditure, particularly on R&D and SG&A, which accounts for more than 49% of its total revenue and therefore exceeds the amount of gross profit. It will therefore be necessary for the group to increase its gross margin or reduce its expenses to be profitable.
  • Since Roku Group is not yet profitable, it has issued debt and common stock to expand. An additional share issue could dilute existing shareholders.
  • It should also be noted that while Roku may have its own intellectual property, other companies can easily produce equivalent streaming hardware or software technology.
  • Competition also remains a major shortcoming of Roku as it faces strong rivals such as Apple, Amazon, Google and many others who have competitive streaming devices and services and strong cash flow to invest. Roku could thus lose market share if one of these competitors manages to offer a streaming service that appeals more to consumers.
  • Finally, the Roku group also faces strong competition from video game consoles and smartphones that can also be used to stream content. There is also competition from additional cable and satellite TV services that can offer compelling content.
The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

Since when has the Roku Company existed?

The Roku Company has been in existence for nearly 18 years now. It was created in 2002 in the form of a limited liability company or LLC by Anthony Wood, the founder of ReplayTV, who had this idea and was the founder of this group. The name Roku was derived from the Japanese word for the number six, as Roku was the sixth company launched by Anthony Wood.

Does the Roku Group exercise its activities internationally?

Roku is an American company that has, up to 2019, achieved the entirety of its turnover from the United States. However, with the introduction of its activities into Europe this group should generate part of its turnover internationally from the end of 2020 with the possibility of expanding into other countries around the world over the coming years.

What is the return and dividend on Roku shares?

The Roku Group hasn’t yet paid a dividend to its shareholders for the last few financial years. It is therefore not yet possible to know the possible return. However we note that its share price has risen over time as well as its profitability with a rise in its turnover as well as other figures such as its net profit and its free cash flow available.

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