June 15, 2020 - 5:06pm EST by
2020 2021
Price: 107.49 EPS 0 0
Shares Out. (in M): 120 P/E 0 0
Market Cap (in $M): 12,898 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT 0 0

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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.

From the Q3 2019 conference call: