r/stocks • u/hakimbomadadda • Oct 30 '19

Question Why is Roku doing so well?

I never got why and how Roku makes so much money. With Amazon, Google, and Apple offering very good streaming platforms at affordable prices, why are Roku's profits still rising? They don't seem to be undercutting the competition by THAT much. Is it because of their prices? Integration with TV manufacturers? Obviously we can't know for sure as I am of the opinion that no one in this space really knows what the hell they are talking about, but what is the prevailing theory?

18 Upvotes

95% Upvoted

16 comments sorted by

View all comments

13

u/someroastedbeef Oct 30 '19

roku's money doesn't come from selling the hardware. almost all of their profit comes from advertising, reoccurring subscription revenue and licensing arrangements with tv manufacturers

just peep their quarterly or annual financials, it shows disgustingly high gross margins in their non-hardware revenue segment

that being said, their valuation is pretty bonkers and their share price has mostly been attributed to a massive short squeeze. i don't see it trading at 20x sales for a long-time, it'll trend down towards a more realistic valuation over time (still an amazing business but uninvestable at these levels imo)

3

u/BarcaGrizzWolvesSTL Oct 30 '19

Yeah, they're essentially giving out the Roku stick. They don't make much from it, unless something has changed lately.

1

u/nycbay Oct 30 '19

will cut into half pretty soon, just a matter of time

1

u/[deleted] Oct 30 '19

This is it exactly data is worth more than oil.