by Ian Harvey
August 10, 2019
Roku has soared more than 450% so far in 2019 -- making it one of the best-performing technology stocks of the year -- and it could just be getting started. Shares rose more than 6.2 percent during Wednesday's session to trade at $169.61 after DA Davidson raised its price target from $135 to $185 per share; and have taken off like a rocket since beginning the year around $30.
And, “Cut-To-The-Chase” Members make 302% potential profit with an Option Call, in 24 hours.
A NICE POTENTIAL PROFIT FOR THE WEEK!
The Los Gatos, California-based TV streaming device giant Roku Inc. (NASDAQ: ROKU) rocketed higher after another positive analyst note, this time from D.A. Davidson that weighed in by raising its price target to $185 from $135, the highest of all ROKU analysts.
The analyst, Tom Forte, believes that the rise of OTT is only at the "top of the third inning" and that the "secular shift" from linear TV to OTT content is "just beginning," which is setting the stage for an "arms race" for proprietary content that is driving the industry.
Over the top (OTT) refers to film and television content provided via a high-speed Internet connection rather than a cable or satellite provider.
The analyst believes that Roku could benefit from the billions that are being spent across the industry on proprietary content and its superior understanding of the international OTT structure. The company's independent status within the industry puts it in a unique position to partner with many different companies rather than trying to complete head-to-head with Netflix Inc. (NFLX), Disney Co. (DIS), or others.
Roku has become a leader in the US streaming TV platform space. In the first quarter, it held over 30% of the market, outpacing the Amazon Fire Stick and Sony PlayStation. Roku is monetizing its market dominance by entering TV advertising.
The stock rose in August after the company’s second-quarter revenue beat analysts’ estimate by 11%. The company is still at a net loss, but analysts expect it to become profitable in the next two years.
Roku proved its worth with strong earnings growth, making some analysts bullish on the stock. When Roku reported its second-quarter results on August 7, it raised its 2019 revenue guidance by 4.3%, or $45 million, to $1.085 billion. It revised its guidance after its first-half revenue was better than expected.
Why the Initial Call Trade on Roku?
The Los Gatos, California-based TV streaming device giant Roku Inc. (NASDAQ: ROKU) has fired off huge user engagement and revenue growth rates over the past several quarters. As it has, ROKU stock has popped.
The company’s IPO was in 2017, and its stock started trading on the Nasdaq on September 28, 2017. Since then, the stock has risen over 490% and is still growing. After falling 37% last year, it has risen 380% year-to-date. Last month, it rose 46.5% as the Nasdaq Composite fell 2.6%.
Roku has been red hot during the trade war, has minimal exposure to China, and projects as a big grower for a lot longer. Again, that’s a winning combination, which should continue to produce gains in a flat market.
Roku, an outlier tech stock, has strong growth potential. The stock rose in August after the company’s second-quarter revenue beat analysts’ estimate by 11%. The company is still at a net loss, but analysts expect it to become profitable in the next two years…..
….. Roku has just started its growth journey in the US market, and international markets offer it even more potential. The company is also poised to grow as more streaming networks are launched. Disney and Apple are set to launch their Disney+ and Apple+ services this fall, and AT&T and Comcast plan to launch their own streaming services next year. These streaming networks could join Roku to reach a large audience, boosting Roku stock even when the overall stock market is down.
Therefore, advising members to consider buying this.....
.....Option trade: Buy the ROKU SEP 20 170.000 CALL at approximately $2.40.
YOU NEED TO BE IN TO PROFIT!
Moving Forward for Roku…..
Roku has a stable revenue base, as it is not affected by the uncertainty of end-consumer demand. This model also reduces competitive pressure, as streaming networks and ads use multiple platforms such as Roku, Google Chromecast/Android, and Amazon Fire Stick.
Roku benefits in two ways—through the growth of active users and the increase in ARPU (average revenue per user). ARPU is a better measure of Roku’s growth, as an increasing number of ads and streaming networks can increase its ARPU even when the number of users remains unchanged.
Roku has evolved into much more than the sum of its parts, providing a unique opportunity for options traders, and it could just be getting started because…..
most of its revenue comes from advertising - Advertising has been extremely lucrative for Roku. While revenue of $250 million grew 59% year over year, platform revenue -- which consists largely of advertising -- increased to $168 million, up an incredible 86% year over year.
its connected-TV operating system is becoming the industry standard - Roku has become the No. 1 television streaming platform in the U.S., with more than 1-in-3 smart TVs sold in the country so far this year powered by Roku's technology.
it has access to Data - Roku ended the second quarter with more than 30.5 million active accounts, up 39% year over year. This gives the company an enormous amount of user data in the ad-supported streaming space, with a growing body of information about the viewing habits of these consumers.
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
Where to Now?
Roku has just started its growth journey in the US market, and international markets offer it even more potential. The company is also poised to grow as more streaming networks are launched. Disney and Apple are set to launch their Disney+ and Apple+ services this fall, and AT&T and Comcast plan to launch their own streaming services next year. These streaming networks could join Roku to reach a large audience, boosting Roku stock even when the overall stock market is down.
Expect its real growth to come from advertising revenue. In the days when cable TV was king, advertisers purchased time slots when popular shows were aired. Roku is looking to change this. The Roku Audience Marketplace wants to do to TV advertising what Facebook did to online advertising.
Roku has a large subscriber base and is generating tons of real-time user data. The Roku Audience Marketplace is creating a user profile every time a user clicks on a movie or series or engages with an advertisement. This way, it can help marketers target specific consumers that are more likely to buy their product or service.
William Blair analyst Ralph Schackart compared Roku and Netflix and made a prediction for Roku’s next six years of growth. Currently, Roku earns an estimated $1.1 billion in annual revenue from 30.5 million active accounts, and it has an ARPU of $21.06.
According to Schackart, expect these numbers to almost triple to $4.5 billion in platform revenue from 82 million active users by 2025. He also expects Roku’s ARPU to grow at a compound annual rate of 16% to $58 by 2025.
A company’s stock price reflects its earnings potential. So, Schackart expects Roku’s market capitalization to grow from its current $18 billion to $40 billion–$50 billion by 2025.
PATIENCE PAYS OFF!
What Can You Do?
Based on analysts’ optimism for Roku, the positive earnings, upbeat guidance, along with the other compelling factors already mentioned, it is expected that the share price will likely continue to rocket higher.
Therefore, if you agree with this scenario consider the following options trade…..
.....Buy the ROKU OCT 18 2019 170.000 CALL at approximately $8.00.
If you are not a member and are interested in being part of this profitable action just CLICK HERE.
AS ALWAYS THE DECISION IS YOURS!
OR other memberships.....CLICK HERE......
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!