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Globe and Mail
28-05-2025
- Business
- Globe and Mail
Roku Stock Plunges 10% in 3 Months: Should You Buy the Dip or Wait?
Roku ROKU shares have lost 10.3% in the trailing three months, underperforming the Zacks Consumer Discretionary sector and the Zacks Broadcast Radio and Television industry's growth of 2.6% and 14.4%, respectively. The dip in Roku's shares can be attributed to investor concerns around potential tariff impacts on the company's Devices segment. Although Roku's TV unit sales might decline slightly as a possible outcome of tariffs, it is unlikely to hurt the company's market share. Roku has a diversified manufacturing strategy. It manufactures in multiple countries, which provides the company with agility and flexibility to help mitigate the effects of tariffs. Additionally, the company has already implemented some minor price adjustments and it does not expect any significant change to its gross profit in the Devices segment. If TV prices rise due to tariffs and consumer demand dips, Roku's streaming players offer an easy, affordable way for users to upgrade and extend the life of their existing TVs without needing to invest in a new one. ROKU's 3 Month Price Performance Roku Benefits From Frndly TV Acquisition On May 2, Roku announced that it had entered into an agreement to acquire Frndly TV. This acquisition is a strategic step to expand its subscription offerings and deepen user engagement on its platform. Frndly TV is a fast-growing 'skinny bundle' service with a loyal viewer base. It offers popular linear channels like Hallmark, Lifetime and A&E, which are genres that strongly resonate with traditional TV audiences, making the shift to streaming. Roku sees Frndly TV not just as a content addition but as a growth asset. The acquisition is expected to be EBITDA-margin accretive in its first full year, signaling financial upside alongside strategic value. What makes the deal particularly synergistic is Roku's ability to scale Frndly TV across its ecosystem. By embedding it into its platform, Roku will enhance both its content bundle and advertising proposition. Roku's Ad Business Grows Amid Fierce Competition Roku operates in a highly competitive advertising industry and competes for revenues with other companies that have launched ad-supported streaming. Some of these companies include Netflix NFLX, Warner Bros. Discovery WBD and Disney DIS. Since its launch, Netflix's ad-supported tier reached 70 million global monthly users as of late 2024, while Warner Bros. Discovery expanded its ad-supported tier on Max to more than 45 countries in the past 15 months. As of January this year, Disney had approximately 157 million global monthly active users watching ad-supported content across its streaming platforms. Shares of Netflix have returned 24.4% in the trailing three months, while Warner Bros. Discovery and Disney have lost 13.3% and 0.3%, respectively. Despite this pressure, Roku's ad-supported streaming business continued to deliver strong momentum in the first quarter of 2025, driven by its expanding platform scale and innovative advertising strategies. Platform revenues grew 17% year over year to $881 million, supported by both video advertising and streaming services distribution. Roku's reach now exceeds half of all U.S. broadband households, with its Home Screen serving as the lead-in for TV for more than 125 million people daily. The Roku Channel became the #2 app on the platform by engagement, with streaming hours up 84% year over year and more than 85% of viewing occurring through Roku's curated interface. Ad activities outside the Media & Entertainment vertical outperformed the U.S. OTT ad market, aided by integrations with Adobe and INCRMNTAL. With tools like Roku Ads Manager and flexible buying options, Roku continues to solidify its standing in the ad-supported streaming space. Roku Reaffirms Guidance for 2025 For 2025, Roku reaffirmed its guidance for Platform revenues of $3.95 billion and adjusted EBITDA of $350 million. Platform gross margin is expected to be approximately 52%. Devices revenues and gross profit are expected to remain consistent with 2024 levels. The Zacks Consensus Estimate for 2025 total revenues is pegged at $4.55 billion, suggesting year-over-year growth of 10.54%. The consensus mark for 2025 loss is pinned at 17 cents per share, which has narrowed by 39.3% over the past 30 days, indicating growth of 80.9% from the figure reported in the year-ago quarter. Roku's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 51.15%. Although the company's price-to-cash flow ratio of 33.94X is slightly ahead of the Zacks Broadcast Radio and Television industry average of 32.98X, this premium valuation reflects investor confidence in the company's growth potential for the rest of 2025. ROKU's Price/Cash Flow Ratio Here's Why You Should Buy ROKU Stock Despite the recent share price pressure, Roku's long-term outlook remains strong. The company continues to grow its platform revenues, expand user engagement and innovate across advertising and content. Its acquisition of Frndly TV adds strategic depth to its subscription offerings, while its diversified manufacturing strategy helps mitigate tariff risks. With a promising 2025 guidance, rising ad momentum and strong performance from The Roku Channel, Roku is well-positioned to thrive in a competitive streaming landscape. As it scales its platform and improves monetization, Roku offers solid growth potential for investors looking beyond market headwinds. ROKU currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report Warner Bros. Discovery, Inc. (WBD): Free Stock Analysis Report Roku, Inc. (ROKU): Free Stock Analysis Report
Yahoo
12-05-2025
- Business
- Yahoo
Roku Acquires Streaming Bundle Service Frndly TV For $185M
Roku is paying $185 million to acquire Frndly TV, a provider of low-cost TV bundles delivered via streaming. The all-cash deal includes $75 million in holdbacks tied to certain performance targets and milestones over the next two years. More from Deadline Lionsgate's 50 Cent Action Becomes No. 1 Action Channel On Roku & LG Channels Taiwanese Drama 'The World Between Us: After the Flames' Sets Premiere Date On Prime Video Joe Pyfer Doc 'Journey To The UFC' Finds U.S. Sparring Partner In Roku; Canal+ & AMC Networks Also Buy Big Media Title Roku announced the deal at the same time it reported first-quarter earnings, with revenue rising 16% to $1.02 billion. The deal, which is expected to close during the current April-to-June quarter, brings another scaled tech player into the world of internet-delivered pay-TV. The sector is currently dominated by YouTube TV, which has 8 million subscribers. Disney is also making moves in the space, having agreed to acquire Fubo earlier this year, giving it 6 million subscribers between Fubo and Hulu + Live TV. Denver-based Frndly operates at the lower end of the price spectrum, with plans offering dozens of general-entertainment channels for $7 to $13 a month. After launching in 2019, the company said it had reached 700,000 subscribers by 2022, with a lineup including A&E, Hallmark Channel, The History Channel and Lifetime, plus thousands of hours of on-demand content. In avoiding pricey sports programming, the service positioned itself similarly to Philo TV, which has cracked the 1 million subscriber mark after a longer run in the marketplace. 'Frndly TV's impressive growth and expertise in direct-to-consumer subscription services make it a compelling addition to Roku,' Roku founder and CEO Anthony Wood said. 'This acquisition supports our focus on growing platform revenue and Roku-billed subscriptions, with a live content offering our users love at an industry-leading price point.' Frndly TV's team, including co-founder and CEO Andy Karofsky, will stay on after the transaction closes. 'We're incredibly excited to join Roku and continue our mission to provide customers feel-good, quality entertainment as the most affordable live TV subscription streaming service in America,' Karofsky said. 'Roku's pioneering role in streaming and its longstanding commitment to customers aligns perfectly with our strategic vision. We believe this combination will help us accelerate subscription growth, given the alignment in core customer demographics and Roku's leadership position in the connected TV ecosystem.' Best of Deadline Brad Pitt's Apple 'F1' Movie: Everything We Know So Far Everything We Know About 'Nine Perfect Strangers' Season 2 So Far 2025-26 Awards Season Calendar: Dates For Tonys, Emmys, Oscars & More Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-05-2025
- Business
- Yahoo
Roku Sees Profits Next Year. Is It Time to Buy?
Roku stock sold off after its recent earnings report but it's moving in the right direction. The company is on track to post an operating profit in 2026. It acquired Frndly TV for $185 million, which will boost its FAST TV options. 10 stocks we like better than Roku › There's no question that Roku (NASDAQ: ROKU) has been a disappointing stock to own in recent years. Over the last three years, the stock is down 45% even as the broad market has surged from artificial intelligence (AI)-driven tailwinds. That sell-off in Roku doesn't even include the bulk of the crash after the stock soared during the pandemic. Despite the stock's woes, there are evident strengths and competitive advantages in the business. It's the biggest streaming platform in the U.S., Mexico, and Canada, and the company continues to deliver steady growth, recently wrapping up a first quarter that included 16% revenue growth to $1.02 billion as streaming hours rose 17% to 35.8 billion, showing both consumption and revenue continuing to grow. Though Roku was profitable during the pandemic, it sunk to a loss in 2022 as it overexpanded and over-hired during the growth period. However, the company is now targeting a generally accepted accounting principles (GAAP) operating profit in 2026, which should be the beginning of consistent profitability for the streaming stock. In addition to the solid revenue growth in the first quarter, Roku's business is demonstrating scale as its operating loss narrowed from $72 million to $57.7 million and its GAAP loss per share improved from $0.35 to $0.19. Despite edging out estimates on the top and bottom lines and reaffirming guidance, the stock still fell 8.5% as guidance was slightly below the consensus. However, the company reaffirmed its guidance for 2025, as well as next year's operating profit. Roku has evolved in recent years as the company has diversified away from its dependence on media and entertainment (M&E) advertising, its biggest advertising vertical and one that exposed its vulnerability when the streaming industry ran into a wall in 2022 during the economic reopening. The company has built up its streaming subscription revenue and it's grown the Roku Channel's audience, which is now the No. 2 app in the platform in the U.S. by engagement with streaming hours up 84% year over year. It's also expanding its content on the Roku Channel with a new partnership with Major League Baseball for a weekly game each Sunday and new Originals, teaming up with sponsors like Airbnb and Miller Lite. The streaming platform also made an intriguing acquisition in the quarter, buying Frndly TV, a subscription streaming service with over 50 live TV channels like the Hallmark Channel, A&E, and the History Channel, for $185 million. Frndly will expand Roku's reach in linear TV and livestreaming free ad-supported streaming television (FAST) channels, which CEO Anthony Wood described as a growth category. Additionally, the company is improving its ad platform and now allows small and medium-sized businesses to easily reuse social media content on connected TV (CTV). One advertiser that used the tool, which is called Spaceback, lowered its cost per site visit by 76% compared to CTV ads on non-Roku platforms. While the ongoing losses and poor stock performance are frustrating, there are a number of emerging tailwinds in the business. First, the company is demonstrating scalability as its margins have improved over the last several quarters. It's controlling operating costs as well, which should allow margins to expand as long as it can grow revenue by double digits. Roku is also seeing strong growth in the Roku Channel and with other FAST services, which the Frndly TV acquisition should boost. Finally, the company is an attractive advertising platform as it can target viewers with a similar precision to social media but with the impact of video. The macro environment could add noise to the company's path to profitability, but Roku will benefit from user growth and the continued growth of ad-based streaming over the coming quarters. If its revenue growth and margin expansion continues beyond 2026, the stock could easily double or triple from its current market cap around $10 billion. Before you buy stock in Roku, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Roku wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,546!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $695,897!* Now, it's worth noting Stock Advisor's total average return is 893% — a market-crushing outperformance compared to 162% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Jeremy Bowman has positions in Airbnb and Roku. The Motley Fool has positions in and recommends Airbnb and Roku. The Motley Fool has a disclosure policy. Roku Sees Profits Next Year. Is It Time to Buy? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
02-05-2025
- Business
- Business Wire
Roku To Acquire Streaming Service Provider Frndly TV
SAN JOSE, Calif.--(BUSINESS WIRE)--Roku, Inc. (NASDAQ: ROKU), the #1 TV streaming platform in the U.S.*, announced today that it has entered into an agreement to acquire Frndly TV, a subscription streaming service that offers live TV, on-demand video, and cloud-based DVR for an affordable price. Based in Denver, CO, Frndly TV was founded in 2019. It offers subscribers access to more than 50 top-rated live TV channels, including A&E, Hallmark Channel, The History Channel, Lifetime, and more, as well as thousands of hours of on-demand content, starting at $6.99/mo. Subscribers also can record their favorite shows using Frndly TV's unlimited cloud-based DVR, as well as access any show or movie that has aired in the past 72 hours on live channels. 'Frndly TV's impressive growth and expertise in direct-to-consumer subscription services make it a compelling addition to Roku,' said Anthony Wood, Founder and CEO of Roku, Inc. 'This acquisition supports our focus on growing platform revenue and Roku-billed subscriptions, with a live content offering our users love at an industry-leading price point.' Frndly TV's team, including its experienced leaders, will stay on after the transaction closes. 'We're incredibly excited to join Roku and continue our mission to provide customers feel-good, quality entertainment as the most affordable live TV subscription streaming service in America,' said Andy Karofsky, Frndly TV CEO and Co-Founder. 'Roku's pioneering role in streaming and its longstanding commitment to customers aligns perfectly with our strategic vision. We believe this combination will help us accelerate subscription growth, given the alignment in core customer demographics and Roku's leadership position in the connected TV ecosystem.' In addition to Roku, Frndly TV will continue to be available on all platforms and devices where it's available today, including Amazon Fire TV, Android TV, Google TV, Apple TV, Samsung, Vizio, the web (and via Chromecast), and mobile (Android, iOS). The acquisition is expected to be completed in the second quarter, pending customary closing conditions. The total purchase price is $185 million in cash, which includes $75 million held back that is tied to meeting performance goals and milestones over the next two years. *By hours streamed (Hypothesis Group: Dec 2024) About Roku Roku pioneered streaming on TV. We connect users to the content they love, enable content publishers to build and monetize large audiences, and provide advertisers with unique capabilities to engage consumers. Roku TV™ models, Roku streaming players, and TV-related audio devices are available in various countries around the world through direct retail sales and/or licensing arrangements with TV OEM brands. Roku-branded TVs and Roku Smart Home products are sold exclusively in the United States. Roku also operates The Roku Channel, the home of free and premium entertainment with exclusive access to Roku Originals, and the #2 app on our platform in the U.S. by streaming hours. The Roku Channel is available in the United States, Canada, Mexico, and the United Kingdom. Roku is headquartered in San Jose, Calif., U.S.A. About Frndly TV Frndly TV is the most affordable live TV streaming service in America. Starting at only $6.99/mo., Frndly TV offers 50+ top-rated live TV channels including A+E®, Hallmark Channel, The History Channel™, MeTV, Lifetime®, Hallmark Mystery, Game Show Network, Great American Family, The Weather Channel and more. Customers can also access thousands of hours of on-demand content, at no extra cost. Frndly TV delivers feel-good programming at an affordable price. For more information, visit This press release contains 'forward-looking' statements that are based on our beliefs and assumptions and on information currently available to us on the date of this press release. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements include but are not limited to those related to the benefits of Roku's announced acquisition of Frndly TV, including the ability to drive subscription growth; the timing of the acquisition; and the features, benefits, and availability of the Frndly TV service and the Roku platform. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. Important factors that could cause our actual results to differ materially are detailed from time to time in the reports Roku, Inc. files with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on Roku's website and are available from Roku without charge. Roku is a registered trademark, and Roku TV is a trademark of Roku, Inc. in the U.S. and in other countries.
Yahoo
02-05-2025
- Business
- Yahoo
Roku to Acquire Streaming Service Frndly TV for $185 Million, Q1 Revenue Jumps 16%
Roku turned in first-quarter 2025 earnings that edged out Wall Street forecasts and announced a $185 million deal to buy Frndly TV, a low-cost subscription streaming service that offers live TV, on-demand video and cloud-based DVR. For the first quarter, Roku total revenue was $1.02 billion, up 16%. Net loss was $27.4 million, or a loss of 19 cents per share, an improvement over a net loss of $50.9 million a year ago. Analyst consensus estimates had pegged $1.01 billion in revenue and a net loss of 25 cents per share, according to LSEG Data & Analytics. More from Variety Amazon Bests Wall Street's Q1 Earnings Estimate, Revenue in Line With Projections Meta Blows Past Q1 Expectations, Ups Capex Target for Full-Year 2025 Snap Delivers Q1 Earnings Beat as Snapchat Tops 900M Monthly Users, Withholds Guidance Given Economic 'Uncertainty' Roku's acquisition of Frndly TV is expected to be completed in the second quarter, pending usual closing conditions. The total purchase price is $185 million in cash, which includes $75 million held back that is tied to meeting performance goals and milestones over the next two years, according to Roku. Based in Denver, Frndly TV was founded in 2019 and bill itself as 'the most affordable live TV streaming service.' It offers subscribers access to more than 50 live TV channels, including A&E, Hallmark Channel, History and Lifetime, plus thousands of hours of on-demand content, starting at $6.99/month. Frndly TV's team, including co-founder and CEO Andy Karofsky, will stay on with Roku after the transaction closes. In addition to Roku devices, Frndly TV will continue to be available on all devices and platforms where it is currently available, including Amazon Fire TV, Android TV, Google TV, Apple TV, Samsung, Vizio, the web (and via Chromecast), and Android and iOS mobile devices. 'Frndly TV's impressive growth and expertise in direct-to-consumer subscription services make it a compelling addition to Roku,' Anthony Wood, founder and CEO of Roku, said in announcing the deal. 'This acquisition supports our focus on growing platform revenue and Roku-billed subscriptions, with a live content offering our users love at an industry-leading price point.' Looking ahead, Roku said that, 'While there is more macro uncertainty than normal, we are providing our best outlook based on our current visibility and what we are observing in our business.' For Q2, it estimates total net revenue will be about $1.07 billion, representing 11% year-over-year growth. That's just shy of analyst consensus estimates of $1.09 billion for the June quarter. 'While tariff-related impacts to our Devices segment remain difficult to predict, we expect Devices revenue and gross profit loss to remain consistent with 2024 levels,' Wood and CFO Dan Jedda wrote in their Q1 letter to shareholders. 'We remain vigilant and adaptable as market conditions evolve. While uncertainty remains, we are confident in our strategy and continue to see a path to achieving positive operating income in 2026.' In Q1, the company's Platform segment, which includes advertising and subscription revenue-sharing deals, saw revenue increase 17%, to $880.8 million. Roku's Devices revenue was $140 million, up 11%. Cumulative streaming hours across households in the quarter came in at 35.8 billion, up 17% from a year ago. With the Q1 results, Roku has stopped reporting quarterly streaming household figures (and, by extension, average revenue per unit), to turn the focus to financial metrics; Netflix made a similar change with its own first quarter earnings. Roku reported 89.8 million streaming households as of the end of 2024. Roku said it expects 'to continue to grow Streaming Households in all our locations,' including the U.S., where it estimates its media devices are used in half of broadband households. Last week, Roku unveiled a new series of streaming players, Roku-made TVs and updated features including the addition of a 'Coming Soon to Theaters' row and personalized sports highlights to its interface. Separately, Roku this week was accused of violating child-privacy laws in a lawsuit filed by Michigan Attorney General Dana Nessel. The company said it 'strongly disagrees' with the allegations the suit, 'which do not reflect how our services work or our efforts to protect viewer privacy. We plan to challenge these inaccurate claims and look forward to demonstrating our commitment to trust and compliance.' Best of Variety New Movies Out Now in Theaters: What to See This Week What's Coming to Netflix in May 2025 What's Coming to Disney+ in May 2025 Sign in to access your portfolio
