Roku’s Success Is Cable TV’s Failure
Roku (NASDAQ: ROKU) released its third quarter-earnings report on Nov. 6, and the ensuing reaction by the market was a bit of a head-scratcher. The company's performance was positive by almost all accounts: Roku's active accounts increased by 36% year over year, while its streaming hours and average revenue per users grew by 68% and 32%, respectively. Further, the company's revenue soared by 50% year over year and came out a bit ahead of analyst estimates, on the strength of 79% year-over-year growth in its platform segment.
However, growth stocks are known to behave erratically, and despite these results, Roku's stock dropped by as much as 20% after its earnings release. Perhaps the sell-off was due to fourth-quarter guidance which didn't live up to expectations, or its shrinking margins. Still, investors can look forward to the company's future, as its recent acquisition of Dataxu -- a provider of demand-side marketing ad tools -- may pay rich dividends down the road, not to mention the fact that the launch of several high-profile streaming platforms may prove beneficial to Roku as well. Arguably the biggest casualty of Roku's success continues to be cable TV.
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Source Fool.com
