Please ensure Javascript is enabled for purposes of website accessibility

Why Roku Stock Skyrocketed 121% in November

By Chris Neiger - Dec 12, 2017 at 7:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The streaming-device maker hit a home run in its first reporting period as a publicly traded company.

What happened

Shares of Roku (ROKU 3.38%) jumped a staggering 121.7% in November, according to data from S&P Global Market Intelligence, after the company reported strong third-quarter 2017 results that easily surpasses analysts' expectations.

So what

Roku shares were already performing well after the company's IPO earlier this year, but they kicked into high gear after the company reported sales in the third quarter of $124.8 million, a 40% gain year over year, and an earnings-per-share loss of $0.10 per share. Both of those far outpaced analysts' consensus estimates of $110.5 million in revenue and a loss of $1.37 per share.

A Roku streaming player sitting next to a remote.

Image source: Roku.

The company also saw gross profit spike 92% to $49.9 million, active accounts increase by 48% to 16.7 million, and average revenue per user jump by 37%.

Roku said the company's higher-margin platform segment was the "key driver" for the company's growth in the quarter and that its advertising business has more than doubled in size from a year ago. The company's platform revenue now represents 46% of total sales, up from just 27% in the year-ago quarter, and accounts for a whopping 89% of gross profit.

Now what

Roku's management expects total revenue between $175 million and $190 million in the fourth quarter and a net income loss of $11 million at the midpoint. In a press release, the company said full-year revenue should "reach or exceed" $500 million, which would be a solid 25% gain year over year.

In all, Roku far outpaced analysts expectations in the third quarter, and the company is seeing its platform segment, fueled by its advertising sales, continue to grow. With its high-margin platform business in full swing Roku is setting itself up nicely for more growth.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Roku Stock Quote
$83.82 (3.38%) $2.74

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.