This week was not a good one for Roku, Inc.
Big moves by competitors Amazon and Apple are worrisome to Roku and its investors for many reasons. First, Amazon streaming already has 30 million active users, more than Roku's 28 million users, and Apple boasts tens of millions of potential customers who could become active users of the new video streaming service. Amazon has also moved quickly to invest in original programming like hit series The Marvelous Mrs. Maisel and The Man in the High Castle, and the firm plans to release new content to Fire TV devices as soon as autumn. In addition, Amazon lets users watch thousands of older films through IMDB Freedive and gives Prime members exclusive access to newer films and shows. Meanwhile, Apple TV+ will launch in autumn with a focus on high-quality original television shows without ads. The project has big names like Steven Spielberg, J.J. Abrams, and Jennifer Aniston on board. An interesting note is that Apple TV+ will also be available on Roku and Fire TV. Though consumers will be able to enjoy both Roku and Apple content on Roku televisions and devices, Apple still is a new large competitor in the video content space that could decide to play dirtier in the future.
Roku has seen a good quarter so far, with its stock up nearly a whopping 100% from $32 in 2019. Roku recently added HBO as a premium add-on subscription on the Roku Channel, allowing customers to watch popular shows like Game of Thrones and Desus and Mero. Jim Cramer of Mad Money remains bullish on Roku, saying "This is a very good company. Roku is fine." However, Roku investors can reasonably worry that the large stock price rise in a single quarter, combined with the unanticipated entrances of two tech giants into Roku's traditional business, might spark an upcoming correction or worse.
The author owns a small long position in AAPL.
- 1. https://www.roku.com/
- 2. https://medium.com/cheddar/amazon-is-asking-advertisers-to-pledge-millions-of-dollars-for-new-free-streaming-services-d6846408d198
- 3. https://www.cnbc.com/2019/04/04/roku-sinks-on-report-that-amazon-is-betting-big-on-streaming-tv-ads.html
- 4. https://www.marketwatch.com/story/roku-stock-tumbles-after-analyst-says-apple-is-indeed-a-threat-2019-04-04
- 5. https://www.theverge.com/2019/4/4/18295227/roku-channel-hbo-premium-subscription