Roku gains as much as 65% in trading debut after IPO

Roku gains as much as 65% in trading debut after IPO

Roku completed a public offering this morning, raising $252 million in an IPO that valued the company at $2 billion.

In its United States Securities and Exchange Commission filing earlier in September, Roku said it has 15.1 million active accounts as recently as June 30. Its streaming service offers users access to programming from Netflix, Hulu, Amazon Video, HBO and more.

In the quarter ended June 30, the company posted a net loss of $15.5 million, bigger than $14.1 million loss in the year-ago quarter. According to its IPO prospectus filed last month, the company hopes to increase the number of hours streamed by each user, and then monetize those hours through advertising.

Snapchat owner Snap Inc (SNAP.N), and meal-kit delivery company Blue Apron Holdings Inc (APRN.N), which listed in the first-half of the year are trading well below their listing prices.

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The company's revenue comes from the sale of Roku TV streaming devices, advertising and subscriptions.

However, there are some pitfalls to be wary of: the online streaming industry has a few very big players involved and Roku might be considered a small boat on this very big ocean.

The cash Roku raised today will be used to compete against a host of tech giants. However, rather than being anxious about only one big competitor, Roku will have to fend off others previously named such as Google, Apple and Amazon. According to research firm EMarketer, Roku claims 32.6% of the country's 150 million connected TV users in 2016, ahead of Google at 29.9%, Amazon at 26.3%, and Apple at 19.9%.

"We are in a golden age of TV", Roku said in its prospectus. Investors sent shares surging on the first day, betting the company can fend off larger rivals. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

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