Roku (NASDAQ:ROKU) was one of the undisputed winners of 2020, gaining 148% over the course of the year. That followed 337% gains in 2019, leaving some investors wondering what they’re missing. The secret lies in Roku’s business model.
On this clip from Motley Fool Live recorded on Jan. 28, Fool.com contributor Danny Vena spoke about the company’s secret sauce.
Danny Vena: I do. I saw a question here. To the Moon mentions about Roku, said, “Roku is a four-bagger for me right now. I’m surprised, to be honest, by this, but was bullish on streaming in cord-cutting so I guess I shouldn’t be too surprised.”
The reason that I wanted to comment on that is because I’ve been writing about Roku quite a bit lately. A lot of folks, when they looked at the company, didn’t understand the company’s business model.
They knew about the Roku dongles, and so as a result of that, they said, “These dongles here are not really going to catch on, yeah. You can get one from Amazon Fire TV, you don’t need to mess with any of that. How does this company grow?”
Not understanding that Roku gets the majority of its revenue from advertising in all the ad-supported channels.
There are something like 10,000 apps on Roku’s platform and many of those are ad-supported. As a result of that, folks didn’t understand the business model.
I think cord-cutting is accelerating, I know that it is. If you go back a couple of years, it was like 1.5 million people, and I think last year was closer to 5 million, or in 2019, it was closer to 5 million. We don’t have the 2020 numbers yet. I think Roku has a long runway, and I think things are looking up, going well for Roku.
Need Your Help Today. Your $1 can change life.