The global COVID-19 crisis kicked off with the first reported case in early December of 2019. Welcome to the Terrible Twos! As we enter the third year of the pandemic -- and with the near-term outlook problematic as infections surge -- it's probably a good time to start investing like the new normal isn't going to change anytime soon.
I bought shares of Roku (ROKU -5.06%) before the pandemic. Last month, I added to that position, and I did so twice.
Despite the shares sliding nearly 30% this year, I feel that the streaming-video pioneer will be one of the best investments of 2022. Roku is positioned to capitalize if we have to shelter in place again. It's also ready to fare even better if we claw our way out of the global crisis.
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Changing channels
Roku is the country's leading streaming hub, commanding nearly double the market share of its largest competitor. It's a pretty impressive feat, as Roku's competition happens to be three of the four most valuable tech companies on the planet.
It doesn't have a problem selling its dongles at a loss, making sure it stays ahead of the competition. It also has deals in place with enough smart-TV makers to be the default operating system of choice in 38% of the smart TVs shipping in this country.
Building its audience base is everything, and the pandemic has helped pack several years of growth into just the past two years at Roku. The 56.4 million active accounts that it had by the end of September is a reasonable 23% increase over the past year. An angle that isn't told very often is that Roku's audience is 75% greater than it was two years ago.
Folks turn to Roku as a free hub to launch thousands of available apps. Roku generates money through ads as it pitches new streaming services or other marketing missives to an audience that's prized by advertisers because they're generally hard to reach. Average revenue per user is up 49% over the past year but is also up 78% since the end of the third quarter in 2019.
It's not just a roll call. Folks are spending more time streaming content at home, and that finds the streaming hours served by Roku up a hearty 88% over the past two years. Roku works, even if the stock price doesn't feel like a winner in 2021.
Give it time. Roku always comes out on top over time.
Roku is in an envious position. It fuels the streaming sessions in more homes than anyone else. It's just scratching the surface when it comes to monetization. It's also been making inroads in securing original content, rewarding its growing base with shows and films they can't get anywhere else.
I already owned a lot of Roku before a pair of purchases late last month. Now it's my second-largest position. Being able to get into Roku now -- for nearly a third below where it was a year ago -- is an easy decision for me. There are risks here, but as long as Roku continues to be a leader in streaming-service stocks, it's going to have a bright future.
