- Needham analyst Laura Martin saw Roku, Inc (NASDAQ:ROKU) as a pure-play way to invest in the growth of the U.S. over-the-top (OTT) and connected-TV (CTV) ecosystems.
- Martin believed that Roku's advertising addressable market (TAM) in the U.S. is the $60 billion of U.S. traditional linear TV advertising revenue reported in 2021 plus TAMs it adds over time.
- Roku devices were in 61 million homes as of March 30 and reached about 150 million U.S. consumers, making Roku the most significant premium long-form film and TV content platform for CTV ads.
- Martin listed four trends aced by Roku:
- Martin saw The Streaming Wars won by ad-driven business models, as "free" always has the largest TAM.
- In the EU and U.S., consumers who voluntarily "opt-in" were most valuable, as per Martin.
- Martin believed that U.S. streaming is mature, so minimizing churn is the most critical upside value driver.
- AdTech is converging with streaming, making the tech stack as necessary as content for minimizing churn, Martin said.
- Martin believed Netflix, Inc (NASDAQ:NFLX) spinoff Roku and Netflix CEOs were constantly in touch.
- Martin reiterated a Buy on Roku with a price target of $205.
- Price Action: ROKU shares traded higher by 8.52% at $89.44 on the last check Tuesday.
- Photo via Wikimedia Commons
