Neil's avatar
$36.4m follower assets
Roku
Does This Change Anything For Roku Stock?

Roku will start building its own TVs while also still partnering up with the likes of Hisense and TCL.

Hardware is a money-losing business so let's see if the platform revenue increases substantially thanks to this move.

We got some positive news as well.
  • Roku reached 70 million Active Accounts
  • 23.9 billion hours streamed in Q4
  • 87.4 billion hours streamed in 2022.

That's a nice increase QOQ as well.
Image upload

My big question is, can they get expenses under control and work their way back to positive FCF?

What do you think?

Taylor Anderson's avatar
The interview Anthony Wood had on CNBC at CES was interesting. He spun a narrative that sounded like they are doing this to not only meet demand, but to “drive platform innovation to then give back to our tv partners” makes me almost wonder if partners are more comfortable with status quo and not willing to take risks with platforms unless it proves out? I wish they would have dug more into what he meant by this. I know that real time ad shopping is a thing they have experimented with Walmart on existing devices, wonder if they are pushing further into this? I hope they push into this because one click buying while watching ads is the holy grail of ROI for advertising
Neil's avatar
@twa6 I had that clip at the start of the video but had to remove it (legal stuff). He also didn't want to answer that last question..

Ad shopping is going to be huge IF it works.
Taylor Anderson's avatar
@couch_investor I noticed that too….. He danced around that last question which also makes me wonder
Neil's avatar
@twa6 At $6b in MC.. why wouldn't it be a target
The Hippie Investor's avatar
I actually really like this move. The idea is to get their OS into as many homes as they can. Smart TVs are the way to do that now. Why would you leave that integral component solely up to third party partners?
The only concern here is cash flow as building the hardware and supply chain will cost capital. It would’ve been a great move to have started this earlier when capital was cheap and revenues were strong, but I think becoming vertically integrated has enormous potential to make the business integral to accessing “television” in the future, similar to what we see with telephones.
Can’t wait to see what they do with this and I see it as a core component to their business mission.
Neil's avatar
@the_hippie_investor They could have just partnered up with one manufacturer exclusively and offer them a cut of the ad revenue.
The Hippie Investor's avatar
@couch_investor They could have, but without being privy to any kind of specifics of what that deal would look like, it’s tough for me to evaluate what the better path would be. I don’t think that’s a bad idea either if they partnered with a quality manufacturer and got a fair deal on the ad revenue sharing. I definitely think it was the right time to be more aggressive and autonomous in the smart TV space regardless of which direction they were heading. I’d like to see their manufacturing be less reliant on China.
Neil's avatar
@the_hippie_investor Hoping to get answers during the call!
Brett Schafer's avatar
I thought the 70 million active accounts number was a great indicator for the health of this business (they need to continue to reach greater scale over the next few years to become a strong negotiator) and the TV deal is probably smart if they can get break-even gross margins (which has been hard to ask for in that segment over the last year!)
Neil's avatar
@ccm_brett Agreed on the first part and on the second part, it's a big IF.
Brett Schafer's avatar
@couch_investor Yes, they are terrible managing expenses/input costs

Author

Related

Already have an account?