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Why Roku's Stock 23% Today – The Motley Fool



What happened

Shares of home entertainment specialist Roku (NASDAQ: ROKU) surged as much as 23% on Friday thanks to a strong fourth-quarter report. The stock pulled back to a slightly milder 22% gain as or 2 p.m. EST

So what

The provider of devices and services includes various streaming audio and video solutions, including its fourth-quarter sales rise of 46% to $ 276 million. On the bottom line, earning fell from $ 0.06 to $ 0.05 per diluted share. The analyst consensus had been pointing to earnings near $ 0.03 per share on non-revenues in the neighborhood of $ 262 million.

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<h2> ] Now what </h2>
<p> Roku's streaming device sales rose by 21<div class=
% while platform revenues soared 77%. Since the software-based platform does so much lower costs of revenue than the hardware-based segment does, Roku doesn't mind the lower-cost business outgrowing the streaming devices division. The additional gross profits were driven right back into the business as Roku boosted its research and development budgets by 63% while nearly doubling its sales and marketing expenses.

This company is behaving like a classic high-growth upstart, and the stock has been appropriately volatile. Roku investors have gained a 68% gain so far in 2019, there are actually prices almost back where exactly they were 52 weeks ago. Today's positive market reaction to a solid holiday quarter looks correct to me.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy


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