uploads///Roku Q reve growth

Why Roku Stock Surged 4.5% on March 6

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Mar. 7 2019, Published 2:41 p.m. ET

Roku’s stock has been on a tear lately

Streaming device maker Roku’s (ROKU) stock has been on a tear since it reported its fourth quarter of 2018 results last month. The stock has risen a staggering 40% since February 21. It rose 4.5% on Wednesday, March 6, even though broader markets tanked.

The optimism behind Roku’s stock has been driven by the phenomenal growth in its ads and licensing business, which now makes up more than half of its overall revenue.

Roku’s revenue from ads and licensing—what it calls “platform revenue”—came in at $151.4 million during the fourth quarter, a staggering 77.1% growth from the same quarter last year.

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Guggenheim analyst reiterated his “buy” call on the stock

The stock surged on Wednesday on the back of optimistic comments by Guggenheim’s Michael Morris, who believes the boom in streaming services will boost the company’s financials.

Morris pointed out that several upcoming streaming services—including those offered by Disney and NBCUniversal—would benefit Roku. The analyst increased his price target from $54 to $77. The stock closed Wednesday’s session at $71.89.

Roku said it hopes to generate $1 billion in revenue this year, and it plans to invest primarily in international expansion. Roku is currently available only in the Americas. Any expansion outside of this region is likely to drive growth over the coming years.

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