Roku and Netflix: Why Both These Streaming Stocks Are a Buy Right Now!
07 Setembro 2021 - 6:31AM
Finscreener.org
Companies part of the streaming segment remain solid bets for
long-term investors. We have seen shares of Roku and Netflix crush
the broader market in the last few years. While Roku (NASDAQ:
ROKU) stock
has gained over 1,400% since its IPO in 2017, Netflix (NASDAQ:
NFLX)
stock is up 1,640% in the last 10 years. The two stocks are part of
a rapidly expanding addressable market and let’s analyze these
companies to see why they are a solid bet right now.
Roku’s stellar Q2 results
Roku launched its first streaming device back in 2008 which was
an operating system integrated with televisions. It is now the
leading streaming platform in Canada and the U.S. and commands a
market share of 31% and 38% respectively in these countries.
As Roku is the only purpose-built operating system for connected
TV, it connects 55 million consumers with content publishers while
monetizing this ecosystem via digital advertising. Last year, Roku
launched the OneView ad tech platform that enables enterprises to
display targeted ad campaigns on multiple devices. These campaigns
can be optimized and measured which provides marketers a higher
return on investment.
The company is
also poised to benefit from the Roku channel which is its
proprietary ad-supported streaming service. Roku is investing
heavily to create its own content and released 23 original series
this month. We can see how the billion-dollar giant is adding
impetus to the flywheel that drives its business.
As Roku generates content, it will gain users that will widen
the targeted base for advertisers. So, the company can increase ad
sales by investing in content creation.
In the second quarter of 2020, Roku’s user engagement rose 19%
despite a 2% decline in viewership across streaming platforms. The
number of active accounts on Roku stood at 55.1 million, a 34% rise
compared to 30.5 million accounts in the prior-year period. Its
sales in the last 12-months also rose by 60% to $2.3 billion at the
end of Q2.
Analysts now expect sales to touch $2.84 billion in 2021 and
$3.9 billion in 2022, while Roku’s bottom-line is forecast to
improve from a loss per share of $0.14 in 2020 to earnings of $1.64
per share in 2022.
Netflix stock has gained 3.4% year to date
After a record-breaking 2020, where the pandemic accelerated the
shift towards online streaming, Netflix stock has taken a breather
this year and is up 3.4% in 2021. Comparatively, the S&P 500
has soared over 20% in the first eight months of 2021.
Netflix began creating original content eight years back and
has produced more than 2,300 titles to date. Its original
content now accounts for 35% of all content on the Netflix
platform. Netflix originals have also been nominated for several
awards including the Oscars and Emmys.
The company has successfully leveraged data and artificial
intelligence to create movies and TV series as well as providing
personalized recommendations that are in line with the requirement
of its user base. Netflix continues to benefit from a first-mover
advantage allowing the company to enjoy a leadership position in a
space that is attracting other tech giants.
Netflix’s
subscriber base has increased from 130 million in the second
quarter of 2018 to 209 million at the end of Q2 of 2021, indicating
a compound annual growth rate of 17%. Its trailing 12-month revenue
has increased from $13.9 billion to $27.6 billion in this period,
which is an annual growth rate of 26%.
The streaming giant continues to gain subscribers despite
increasing its subscription fees from $10.45/month in 2018 to
$11.67/month in 2021, indicating its pricing power and a robust
content strategy.
Netflix (NASDAQ:NFLX)
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