Justin Sullivan/Getty Images News
Investment Thesis
Take a huge secular trend, add a rapidly growing, founder-led, industry-leading company, and combine that with a market that doesn't like anything technology related right now – the result? Roku (NASDAQ:ROKU).
This is a company that has seen its share price fall dramatically over the past year, and in a world where streaming services such as Netflix (NFLX) are losing millions of subscribers, you might understand why. Yet Roku is not Netflix; it isn't losing subscribers, and it expects annual revenue growth of 35% in 2022 off the back of +50% revenue growth in both 2020 and 2021. Despite near-term headwinds, the company continues to execute and capitalize on the growing shift from linear TV to streaming, and I think this latest share price collapse represents an incredible opportunity for long-term investors.
Roku Business Overview
Roku is the leading TV streaming platform in the United States, Mexico, and Canada (by hours streamed) and has been driving a shift from linear TV to streaming over the past decade. On the Roku platform, customers can access all the major streaming services through their TV, including the likes of Netflix, Disney+ (DIS), Apple TV, (AAPL) and even Roku's very own free to view Roku Channel (aff).
There are two ways that TV viewers can gain access to the Roku platform. The first is by purchasing a Roku streaming dongle which can be easily plugged in to any HDMI port on a TV, transforming it from a linear TV to a connected TV. The second way is through TV manufacturers integrating Roku's operating system into their connected TVs. Manufacturers such as TCL, Hisense, Hitachi, Philips, and many more offer TVs with Roku's operating system already integrated, giving Roku access to millions more households across the globe
TCL Roku TV – Currys UK
There are two different revenue streams for Roku: platform revenue and player revenue. Player revenue relates to hardware and is generated primarily through…