WASHINGTON, September 28, 2017 – 2017’s relatively anemic IPO market got a boost Thursday morning when the newly-IPO’d shares of current set top box champ Roku, Inc. (new symbol: ROKU) made their splashy debut.
Priced Wednesday evening at $14 per share, ROKU skyrocketed some 30 percent higher, then dropped back just a bit. As we write this article, circa 12:30 p.m. ET, a fresh wave of buying seems to be underway, with ROKU shares currently pricing at about $20.42 on the ask, a nearly 45 percent gain in just a couple hours of trading. Nice work if you can get it.
Perhaps ROKU can help perk up the tech sector, which is once again being dragged down by Apple (AAPL).
After recovering fairly robustly in Wednesday trading action, the shares of the Mac and iPhone giant are being hammered again today by the same intravenous drip of negative but unsubstantiated iPhone X rumors, most of them revolving around various production delays prior to the device’s November 3 release date.
Any delay in this expensive 10th iPhone anniversary model is not exactly a make or break deal for Cupertino’s giant tech king. Even if some of the rumors turn out to be true, Apple continues to have an excellent record in new product releases and availability. Any supply line or logistics glitches tend to be remedied in days rather than weeks or months.
Sure, if you’re an investor who expects massive Q1 iPhone X numbers to goose the company’s next quarterly report, you’re likely to be a tad nervous about these rumors. But the company will book its expected numbers anyway, even if they mostly fall into the next quarter.
Over several decades, we’ve continued to view the investor obsession with quarterly corporate earnings figures as distracting nonsense. Companies like Apple that consistently meet or beat even analysts’ most optimistic numbers will deliver far better-than-average performance over time, so why sweat an occasionally iffy quarter, particularly if the alleged negatives are far from a sure thing?
Moving back to ROKU, it’s gratifying to see such an enthusiastic buy-in for these shares today, even though our brokerage firm didn’t get a single share of this hot issue to sell to its eager customers – like moi. ROKU’s initial success on the market bodes well for the still developing TV entertainment industry that’s not exactly TV.
We came a little late to the Roku party, product wise, picking up a Model 3 unit not too long ago. Since then, we’ve reduced the TV part of our Verizon FiOS package to near zero, as, like most cable packages today, it’s so larded with useless, ad-clotted crap and left-wing propaganda outlets that we see no point in subsidizing this grossly overpriced dinosaur entertainment model.
And we never did subscribe to any of the grossly overpriced ESPN sports packages, either, which turned out to be prescient. That increasingly disgusting Disney-owned network apparently decided some 2-4 years back that its paying sports fans would be more interested in jocks and ex-jocks promoting socialism rather than playing and/or analyzing athletic performances on the field.
As we learned quite definitively over the past week, with regard to the NFL’s “taking a knee during the National Anthem”
protest SJW virtue-signaling exercise, sports fans, still predominately male and ready for some beer and some fun, on a Sunday afternoon, will turn this kind of unwanted crap right off and find some other form of entertainment. They want to watch sports, not listen to what a bunch of a-holes they are, if you’ll forgive our French. So why watch or even pay for this?
Roku offers a neat solution to the problem, providing a basic selection of choose-your-own program sources via Netflix, Amazon Prime, and a few other cheap and annoying but free “channels” you can skip if you wish. You can also select, priced à la carte, any number of other limited channel services like Sling TV, or, more recently, sub-sections of premium services like HBO.
In other words, Roku lets you build your own entertainment package, depending on what you want to see vs. what you want to spend. What a concept!
Yes, there are other set-top boxes out there, like Apple TV. But Roku, in many respect, got there more or less first, got there cheap in an age where few real bargains remain, and aims to hold its physical dominance in this arena.
Apple, Amazon (AMZN), Google (GOOGL), et. al. won’t just sit there, of course. They’ll quickly attempt to eat Roku’s lunch, given their deeper pockets. But Roku – like most tech IPOs, still not profitable – is also moving into a larger advertising model as well as developing related software products, sensing that its moment as everyone’s cheap, more or less pure set top box alternative to the dying cable TV dinosaur may itself be nearing an inflection point.
Even so, we like the business, but not the price of these new shares. The rich guys, as usual, will be flipping their shares today for the nice big pop they got for being gifted in on the deal. As for us, we’ll keep watching. If ROKU shares settle down a bit, and if the company can show they might be able to make a profit some time before mid-century, we could get interested in getting in to these shares ourselves.
As for now, however, we’re not going to be the eager suckers who typically pay up for the shares the rich guys are flipping right now. That, friends, is the best way NOT to make money.
The rest of the market is pretty dull today, actually, so we’ll look back into the action – if there is any – on Friday.