Roku IPO: Shares up 30 percent in morning trading

Randall Padilla
September 29, 2017

Roku Inc. (NASDAQ: ROKU) entered the market with a bang on Thursday morning as one of the most anticipated initial public offerings (IPO) this fall.

The company had recently filed for an initial public offering and late Wednesday had set its IPO price at $14 per share, which raised about $219 million and made for a market value of $1.3 billion.

In addition to sales of Roku players and TVs, the company has been expanding its advertising business.

To compete better, the California-based firm has opened its platform to more TV apps than its peers, including Amazon Prime Video, Hulu and Google Play, allowing it to offer over 3,000 channels internationally. However, rather than being anxious about only one big competitor, Roku will have to fend off others previously named such as Google, Apple and Amazon.

In an SEC filing, the company disclosed it had about 15.1 million activge accounts and has streamed 6.74 billion hours of content. Its filing have shown that Roku lost $42.8 million in 2016 on almost $399 million in revenue, up 25 percent from 2015.

Roku is poised to capitalize on the popularity of streaming content. The company takes a cut of advertising revenue from apps on Roku devices and it's become an increasingly important part of Roku's financials.

Earlier this month, the company launched the Roku Channel, which features hundreds of free, ad-supported movies. Menlo Ventures was the largest stakeholder prior to the IPO, owning 35.3 percent of the company. It generated revenue of $199.7 million in the first six months of 2017, up 23% from $162.3 million in the same six months of 2016. Roku's offering, on the other hand, plays nice with whatever service you want to watch.

Roku investors have to hope the company's perception on Wall Street doesn't go the way of Snap or Blue Apron - businesses whose ideas can be easily replicated by a deep-pocketed competitor. "These big companies are a force to contend with".

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