Roku Q1 Review: Stock Rebound Won’t Silence Skeptics

Roku Q1 Review: Stock Rebound Won’t
Cheyne Gateley/VIP

Who said the so-called “stay-at-home” trades of 2020 were unraveling? 

Roku stock spiked as much as 7% in after-hours trading Thursday after the company proved to investors it was able to maintain the strong momentum it saw last year during the pandemic through the first three months of 2021.  

Shares of Roku were on absolute fire for most of 2020 and the early part of 2021 but have taken a beating over the past couple months, as investors began to doubt the company’s ability to sustain the robust growth it saw during the pandemic. Excluding Thursday’s after-hours move, Roku stock was down more than 10% this year and 40% since its recent highs.  

However, much to the surprise of both Wall Street and Main Street, Roku is doing fine — for now. 

The streaming company handily beat estimates on both the top and bottom lines, with massive 79% revenue growth in Q1. And perhaps more important, Roku grew its Average Revenue Per User (ARPU) by 32% in Q1, to a whopping $32.14 on a trailing 12-month basis. 

Active accounts, a very closely watched metric for Roku, increased 35% to 53.6 million, and streaming hours rose by 1.4 billion hours in Q4, to 18.3 billion. While those figures are impressive and growth has been steady overall, the growth is relatively stagnant when looking at how many hours are actually being streamed on average per day by an active Roku account — only about 3.8 hours per day, which is a slight gain from 3.6 hours per day in Q4.  

Roku was able to quell investors’ fears of a slowdown for now, but this is just the beginning, and the stock is still a long way from its all-time high of $469.70 per share.  

That begs the question, will these kinds of growth figures be enough amid the intense competition from much larger companies such as Amazon, Google and a handful of others, or what more will Roku need to bring to the table?  

For one, it will have to continue to ramp up smart-TV partnerships, dominate the connected-TV advertising market and accelerate international expansion in order to keep up with the growing competitive landscape. Oh, and let’s hope its exclusive content push succeeds.