Roku: Winner in a generational shift

Roku is a precious asset, it might be bought by Comcast, but really it is better and probably worth more in the long run as a stand-alone platform. Our timing was great when we started working on ROKU, after the ~$100 move, less so.

• ROKU is a leader in a probable winner takes most market, with excellent economics and a highly scalable advertising platform model.

• 2020 was a critical moment in the evolution of TV and content in the U.S.. Content owners embraced streaming. Not only did they embrace streaming, but they embraced streaming and its monetisation via advertising. (AVOD)

• Roku is a content agnostic play on advertising dollars moving from linear TV to streamed TV, which looks inevitable. We think we are hitting the inflection point in the s-curve in the near future.

• The bet is on how much a U.S. Roku account is worth. Today it is ~$24-26 in advertising dollars per year, vs. linear TV at $500 in advertising per household. There are $60-$70bn in Ad dollars up for grabs as they follow consumers to streamed TV.

Potential Upside: $710 (+60%)

Sensible Downside: $308 (-30%)

Link to Research