Please ensure Javascript is enabled for purposes of website accessibility

Can Roku Stock Keep Going After Last Week's 15% Pop?

By Rick Munarriz - Dec 18, 2017 at 10:00AM

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 leader in streaming media set-top boxes keeps moving higher

Roku (ROKU -3.83%) has been one of the market's biggest winners in its brief tenure as a publicly traded company. The pioneer of streaming media players padded its gains with a nearly 15% pop last week. There were a couple of positive factors pushing it higher for the week. T-Mobile (TMUS -0.41%) announced that it will launch a disruptive digital TV service next year, something that should benefit Roku as a service-agnostic platform. It was also revealed that Twenty-First Century Fox (FOX) (FOXA) will keep its minority stake in Roku when its proposed $52.4 billion asset sale to Disney goes through in the first half of 2019. 

The stock's eventual 14.8% gain for the week follows a blazing-hot November when the shares more than doubled. The stock has now soared 232% since bottoming out in the mid-teens the day it went public less than three months ago. The stock has also closed higher for eight straight weeks. 

Roku TV app on Windows 10.

Image source: Roku.

More ammo for Roku's box 

T-Mobile announced that it's acquiring TV tech start-up Layer3 TV, a platform that integrates online video content with social media in five U.S. cities. It's fair to say that Layer3 TV will factor into the service that the wireless carrier plans to roll out nationwide in 2018. 

The T-Mobile news sent shares of traditional cable and satellite television providers lower, but Roku understandably went the other way. Unlike the other streaming devices that are tethered to a tech giant, Roku plays nice with just about everybody -- something that is likely playing an important role in the growing number of smart TV manufacturers that are rolling out their televisions with Roku's operating system. 

A bet on Roku is more of a wager on its platform than its perpetually evolving hardware line. The better-than-expected 40% surge in revenue in Roku's well-received third quarter was the handiwork of a 137% burst in platform revenue. The more services available like T-Mobile's upcoming offering the more opportunities Roku will have to monetize its platform. 

Twenty-First Century Fox holding on to Roku is also interesting. It didn't have a problem selling its 30% stake in Hulu to Disney as part of the head-turning asset sale, a move that will push Disney's stake in that streaming service to 60%. Tapping Roku as one of the few assets that Twenty-First Century Fox will retain suggests that it sees a good outlook for growth there. 

No winning streak lasts forever, and it wouldn't be a surprise if Roku closes lower after nearly two months of weekly gains. However, it's also hard to bet against momentum, something that is clearly in Roku's corner these days.

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

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
$137.00 (-0.41%) $0.56
Roku Stock Quote
$88.53 (-3.83%) $-3.53
The Walt Disney Company Stock Quote
The Walt Disney Company
$96.08 (-1.13%) $-1.10
Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.
Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.

*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 07/07/2022.

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.