Roku: Top Analyst Provides Takeaways From Management Meeting


Roku (NASDAQ:ROKU) has been a painfully volatile stock to own. The stock made its public debut at $14 last September, soared to $23.50 on the first trading day, and skyrocketed to the mid-$50s by the end of 2017. Yet, the stock dropped back to the low $30s this year, after investors grew concerned about its waning hardware sales, the sustainability of its platform business, and its lofty valuations. In addition, Roku stock was rocked by the news that Amazon and Best Buy were partnering to sell new Fire TV Edition smart TVs.

To gain more clarity on questions related to recent concerns, Oppenheimer’s top analyst Jason Helfstein hosted a well-attended investor group meeting with Roku’s CFO Steve Louden and Head of Investor Relations James Samford.

Helfstein stated, “Investor questions focused on The Roku Channel, AVOD/SVOD revenue/inventory sharing economics, ad monetization and Amazon’s recently announced deal with Best Buy. On The Roku Channel, management emphasized fast viewership growth while noting that 100% of inventory on The Roku Channel was being sold by Roku, which was helping balance the company’s historical ad inventory supply constraint. On content partner economics, management noted that the mix of inventory on the platform being monetized by Roku is increasing, while emphasizing the view of video advertisements being a 50%+ gross margin business, over time. As the company gains scale, management believes their negotiating position relative to content providers will improve. On ad monetization, management noted Roku’s ability to convert “light-targeting” advertisers to more advanced targeting products, which would help the company maintain a premium CPM. On the Best Buy/ Amazon deal, management noted their belief that the number of Roku OS TV SKUs in major retailers would continue to increase, while also noting that 25% of smart TVs sold domestically were Roku OS in 1Q:18 vs. 20% in 2017.”

Net net, Helfstein remains sidelined on Roku shares with a Perform rating.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Jason Helfstein has a yearly average return of 18.7% and a 69% success rate. Helfstein has a 18.8% average return when recommending ROKU, and is ranked #38 out of 4801 analysts.