I believe ROKU will be meaningfully more valuable in coming years and expect a low-to-mid teens IRR from here.
Roku is an advertising video on demand (AVOD) company. It’s a beneficiary of the secular shift from linear TV viewing to on-demand viewing, as more customers cut the cord and go over-the-top (OTT).
The size of the TV ad market, ex-sports, is tens of billions of dollars. Currently, about one third of TV viewing is OTT, but only 3% of that budget has moved over. This is a gap similar to the early days of mobile, when mobile usage was high but ad revenues hadn’t yet shifted to mobile. It worked out well for Facebook. I expect a similar shift to benefit Roku.