Despite 2020's challenges, this holiday season looks poised to be the best holiday season yet for streaming-TV companies like Roku (NASDAQ:ROKU). Recent research by the Harris Poll on holiday shopping and streaming-TV trends suggests that many consumers will spend more than last year on gifts. Streaming-TV ads are also playing a key role in buying decisions for many of these shoppers.
Here's a closer look at the important takeaways from the Harris Poll holiday survey -- and why Roku is well-positioned to benefit from shopping and streaming trends this holiday season.
A "Season of Streaming" for Holiday Shoppers
The "Season of Streaming is upon us!" said Roku Chief Marketing Officer Matthew Anderson about insights discovered in the Harris Poll report. There's a good reason for his optimism. A survey of more than 2,000 U.S. adults in September led to a number of telling takeaways about holiday shopping and streaming trends, including:
- About 70% of shoppers plan to spend the same or more on gifts this holiday season than they did last season.
- Those who stream their TV over the internet plan to spend a third more on average than nonstreamers this holiday season.
- Nearly 80% of streamers will primarily shop online.
- Cord-cutting in the U.S. accelerated by 22% in March, as consumers sheltered at home.
- About 43% of survey respondents said an ad on a streaming service has caused them to pause content, go online, and shop for an advertised product.
With shoppers ready to open up their wallets this holiday season, and given streaming TV becoming more relevant in consumers' lives, ad spend in the nascent ad channel could see a nice boost during the fourth quarter of 2020.
Roku's growth could accelerate in Q4
In the second quarter, Roku's revenue growth decelerated as consumers sheltered at home and advertisers responded by reducing ad spend. The tech company's total revenue growth during the quarter still rose a nice 42% year over year -- but this was down from 55% growth in Q1. In addition, analysts are currently modeling for Roku's Q3 revenue growth rate to contract by another few percentage points.
Are analysts underestimating Roku's revenue growth potential in Q4? On average, analysts expect Q4 revenue to rise just 34% year over year. If this Harris Poll survey truly reflects U.S. shopper sentiment from streamers, marketers may prove more aggressive than analysts currently expect. Indeed, it wouldn't be surprising to see Roku's revenue growth accelerate in Q4.
Of course, it's always possible that COVID-19's negative impact on consumer shopping will be greater than expected. Further, investors should refrain from speculating this holiday shopping season, as there are just too many unprecedented circumstances to know how advertising spend will fare. Nevertheless, this Harris Poll shows some promising data for Roku investors.