A blowout financial report all but affirmed why Roku Inc. (NASDAQ:ROKU) is flying high in the market. The streaming video pioneer was one of the best-performing stocks in 2020, rallying by more than 100%. In keeping up with the momentum, the stock is up by more than 30%, two months into the New Year.
Roku Edge
The impressive run comes on investors taking note of the fact that the streaming video platform and device maker is one of the beneficiaries of the stay-at-home crisis. Likewise, the company succeeding in outmaneuvering industry heavyweights such as Amazon has all but continued to strengthen its sentiments in the market.
As it stands, more streaming occurs in Roku devices, with 38% of Smart TVs sold last year running on Roku operating software. Similarly, the company has succeeded in attracting a significant amount of advertising spending on advertisers looking to make good use of its more than 50 million active accounts.
Blowout Earnings
A strong Q4 earnings report has all but affirmed Roku's competitive edge, likely to fuel another leg higher. The company delivered a 58% increase in revenues that came in at $649.9 million, beating consensus estimates by $33.4 million. Earnings per share, on the other hand, came in at 49 cents a share, beating estimates by 54 cents a share.
In addition to revenue and earnings beat, Roku delivered a 24% increase in average revenue per user that totaled $28.76. Similarly, active customer accounts increased 39% to 51.2 million accounts exceeding analysts’ expectations.
The streaming platform provider has also hinted that it expects growth to continue in the first quarter. In its earnings report, it confirmed it expects revenues in Q1 to range between $478 million and $493 million, way above analysts’ expectations of $455 million.
Roku remains well-positioned to edge higher, given the solid underlying fundamentals driving the current upward momentum. A breakout past the prior highs of $486 should set the stage for the stock to make a run for the $500 a share level.