On June 16, Year(Name: Roku) publish a partnership with Hamazon(NASDAQ: AMZN) That will allow advertisers to access the streaming expert's ecosystem through the Amazon Advertising Platform. This agreement represents a significant move forward to Roku. Although the stock has encountered some headgear over the past year, this new development is once again highlighting why Roku's stock is worth investing in for those who focus on the long game. Let's dig deeper into this partnership between Roku and Amazon – as well as the rest of the first business – to understand why.
Amazon is a notable player in the connected TV market (CTV). However, Roku continues to reign supreme – it has a leading market share in the UD Amazon size advantage that has not allowed him to take the spot, and is now partnering with his opponent Longtime. Amazon and Roku will combine their respective audiences, including 80 million households and more than 80% of CTV accounts in the US, and give advertisers unique access to this large ecosystem through the Amazon Demand Side Advertisement platform. This is also a victory for Roku. Here's why.
Image source: Getty images.
One significant long -term opportunity for the company is the continuous change of cable to stream for viewers and advertisers. However, advertisers presented a very fragmented CTV landscape to advertisers, including difficulties in reaching targeted audiences across various platforms and effective HR frequency management. Roku noted in a recent press release:
Early tests of this integration have shown significant results. Advertisers using this new solution reached 40% more unique viewers with the same budget and reduced how often the same person saw nearly 30%, enabling advertisers to benefit from three times more value from their advertising expenditure.
That is, advertisers should have more earnings of the same amount of expenditure. The deal helps to address some pain points they had and helps sell even more companies on the benefits of pouring ads dollars into the type of platform that Roku offers.
It is worth highlighting that this deal is valuable to all parties in question, mainly due to the main CTV Roku ecosystem. He also highlights the strength of his The impact of a network. As the value of the Roku platform increases as its audience numbers grow, partnerships of this kind may become more common.
Roku has encountered some issues in recent years. Its average revenue per user (ARPU) has stopped, while it remains unprofitable. Although the company is no longer reporting ARPU metric, the management previously attributed the poor growth of ARPU to the company's expansion efforts in out -of -US markets, where it focuses on scale first, rather than monetization. That was the one blueprint that followed in his more mature markets when he sometimes sold his name devices loss to enough households in his ecosystem.
Investors have seen the results of this US strategy, where Roku already has a leading market share. This should give investors confidence that it can achieve similar results in other regions. What about the continuous red ink on the bottom line? Investors prefer profitable companies, especially in this uncertain economic and geopolitical environment.
But Roku also takes great strides in this section. In the first quarter of the company, revenue came in at $ 1.03 billion, up 16% year -on -year. The company's net loss per share was $ 0.19, an amendment of the $ 0.35 loss of the sharing reported in the quarter of the previous year. Roku may not be consistently profitable, but the company is growing its top line on a good clip and making progress on the bottom line. And overall, the company is still in a great position to exchange for the huge long -term change of cable to streaming. And this is one more thing that makes the stock attractive.
Roku's price-to-sell ratio is 2.6 of this writing. In a stock market at always highlights and valuations that reach unsustainable levels, Roku's modest valuation is particularly rare for growth stock at a leading site in the industry. For this and all the other reasons, the company's shares are worth buying.
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John Mackey, former CEO of Whole Foods Market, a Sub -company from Amazon, is a member of the Board of Directors of the Motley Fool. Prosper Junior Btyy He has posts in Amazon. The Motley Fool has jobs in and recommends Amazon and Roku. The fool has motley and Disclosure Policy.
