Having risen 330% in 2019, is it buying, selling or selling?
With such a huge upturn for the stock, many investors are probably asking if the stock is a buy, hold or sell today. To get a better understanding of what investors should do with Roku shares when trading near $ 133, here's a look at the underlying business and its valuation.
A group of young people watching TV
Image source: Getty Images.
Impressive growth
<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = "It is easy to see why analysts and investors would be optimistic about Roku following the company's result in Q2 last week.The revenue growth accelerated during the quarter.The streaming TV platform specialist had a year-over-year growth over 59% – up from 51% and 45% prices in Q1 2019 and Q4 2018, respectively. " data-reactid = "26"> It's easy to see why analysts and investors would be optimistic about Roku following the company's second-quarter results last week. Revenue growth accelerated during the quarter. The streaming TV platform specialist saw a 59% year-over-year revenue growth of 59% – up from prices of 51% and 45%, respectively, in the first quarter of 2019 and the fourth quarter of 2018.
"Both platform and player segments exceeded expectations ours, which resulted in an exceptional quarter, "said the management of the company's shareholder letter for the second quarter. "Total revenue growth accelerated to 59% this year, primarily driven by growth in advertising when Roku made money on video ad views again more than doubled YoY."
Platform revenues, which account for 67% of total revenue, were particularly strong in the second quarter, with an 86% increase over the year.
<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "It is important that Rokus profitability The Company's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased from $ 7.1 million in the second quarter of 2018 to $ 11.1 million in the second quarter of 2019. " = "29"> It is important that Ruok's profitability also improves. The company's adjusted EBITDA (profit before interest, taxes, depreciation and amortization) increased from $ 7.1 million in the second quarter of 2018 to $ 11.1 million in the second quarter of 2019.
Meanwhile, Rokus's dominance is clearer than ever, with the company's devices account for 39% of the US streaming media player's installed base, according to estimates by Parks Associates. With such a significant market share, Needham analyst Laura Martin said in a note to clients this week that it would be "impossible" to launch a new streaming service with no distribution success through the Roku platform.
A premium rating
<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But investors have to pay Roku now has a market value in excess of $ 15 billion – a steep price tag for a company that is expected to achieve revenue and adjusted its full-year EBITDA of $ 1.1 billion and $ respectively In addition, management expects to continue to lose money this year on GAAP the company guided a net loss for the full year between $ 71 million and $ 61 million. "Data-reactid =" 32 "> But investors have to pay a steep premium to get into this growth story. Roku now has a market value in excess of $ 15 billion – a steep price tag for a company that is expected to achieve revenue and adjusted EBITDA for the full year 2019, around $ 1.1 billion and $ 40 million, respectively. In addition, management expects to lose money this year on a GAAP basis. The company advised for a net loss of $ 71 million to $ 61 million.
While Roku's leadership over the competition appears to be getting bigger, investors may be looking for shares to take a breather before jumping into this fast-growing company's stock. On the other hand, with such a strong performance in the rearview mirror, current shareholders may continue to hold in case the company continues to exceed expectations.
Simply put, I think the Roku stock is a stock at today's price of about $ 133.
<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Daniel Sparks has Motley Fool owns shares in and recommends Roku Motley Fool has a disclosure policy . "data-reactid =" 36 "> Daniel Sparks has no position in some of the shares listed. Motley Fool owns shares in and recommends Roku. Motley Fool has a disclosure policy.
<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This article was originally published on Fool.com "data-reactid =" 37 "> This article was originally published on Fool.com
