Roku will re-brand the content from its acquisition of Quibi as “Roku Originals” which will be launched on the Roku Channel. Roku Originals will also be the name of future original programming from the digital media player company.
Roku (ROKU) expects to release 75 Roku Originals on the Roku Channel this year. In 4Q 2020, the Roku Channel reached 63 million people in the United States, reflecting over 100% year-on-year growth.
Roku’s VP of Engagement Growth Marketing, Sweta Patel said, “We’re thrilled to introduce this award-winning and diverse portfolio of entertainment under the Roku Originals brand – it's relevant, fun and thought-provoking TV that has something for everyone from the best talent in Hollywood...The Roku Channel is the place for incredible, free programming and we are excited to bring this premium content to the biggest screen in the home.”
Roku acquired Quibi’s content distribution rights back in January this year for an undisclosed amount. In the fourth quarter of last year, Roku crossed a major milestone of 50 million active subscribers and its users streamed 17 billion hours worth of content. (See Roku stock analysis on TipRanks)
Last week, Merrill Lynch analyst Ruplu Bhattacharya reiterated a Buy and a price target of $500 on the stock. The analyst estimates that in 2021, 2022 and 2023, Roku will have 65.5 million, 80.9 million and 97.4 million total active accounts, respectively.
Bhattacharya added, “We view our assumptions as conservative since historically, Roku has grown its share, each year, in both the digital streamer and TV markets, whereas we assume no share gain going forward. Also, the markets for smart TVs and digital streamers will likely see stronger growth than we have assumed in this analysis as more global households switch to streaming.”
Overall, consensus on the Street is that ROKU is a Moderate Buy based on 14 Buys, 5 Holds, and 1 Sell. The average analyst price target of $476.95 implies upside potential of about 33.7% to current levels.
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