Roku raises $219 million in IPO

Los Gatos-based TV streaming startup Roku raised $219 million in its initial public offering Wednesday.

Now the company’s next test will be to see how the public market responds to its debut.

Roku, which helps customers “cut the cord” and stream their favorite TV shows online instead of relying on a traditional cable provider, offered 15.7 million shares at $14 each, the company said late Wednesday. That’s the high end of the $12 to $14 range Roku set last week. The company originally filed for a $100 million IPO on Sept. 1.

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Roku offers a streaming service as well as Roku TVs with streaming capabilities built in. The startup generated a net loss of $24.2 million on revenue of $199.7 million during the first six months of the year, according to company’s filing with the Securities and Exchange Commission. Roku pulled in $398.6 million in revenue last year, up 25 percent from the year before.

And Roku operates the number-one TV streaming platform in the U.S. as measured by total hours streamed, according to the company’s filing. As of June 30, Roku had 15.1 million active accounts.

The streaming platform is a new offering for Roku, which formerly focused on hardware sales. Analysts seem to think the platform has potential, but the entertainment streaming market is competitive.

“Unlike consumer electronics makers GoPro (GPRO) and Fitbit (FIT) – both down considerably from their IPOs – Roku is coming to market after successfully generating revenue from delivering content, all while outmaneuvering behemoths like Apple, Google and Amazon to become the top streaming platform in the U.S.,” wrote Renaissance Capital, which manages IPO-focused exchange-traded funds. “But don’t expect Amazon to roll over: Roku still needs to get boxes in more homes, and intense competition has forced discounts, leading to a decline in (year-over-year) hardware revenue.”

The company plans to start trading Thursday morning on the NASDAQ under the ticker symbol ROKU.

Photo: The Roku 4 streaming device. (Courtesy of Roku) 

 

Tags: IPO, IPOs, roku

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