Shares of television (TV) streaming platform Roku (NASDAQ:ROKU) gained 11.1% yesterday after announcing a strategic partnership with Canadian e-commerce portal Shopify (NYSE:SHOP). The deal marks the first-ever shopping experience, whereby customers can buy products from Shopify merchants directly from their TV sets through Roku Action Ads. SHOP stock also gained 2% on the news.
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This collaboration will enable customers to complete the entire shopping process, from browsing for merchandise to making payments, directly from the convenience of their large-screen televisions. The checkouts for the purchases can be done through Roku Pay, its payments platform. Viewers simply need to press the OK button on their remote when they see an ad they like and scan through the assortment on TV. Once the purchase is completed, they can resume their streaming journey just as simply. Email confirmation of the purchases will be sent directly by the merchants.
The merchants who have agreed to the partnership with Shopify and Roku currently include men’s apparel brand True Classic, home-fitness rowing machine maker Ergatta, and wellness brand Olly. The platform will help advertisers receive more stats about customers’ purchasing habits and their likes/dislikes, as well as engage a whole new audience for their brands (increase visibility), which can turn into potential customers.
A Win-Win Situation for Both
The partnership with Shopify comes on the heels of Roku’s successful launch of Roku Action Ads. This actionable ad program helps boost advertisers’ presence on TV by sending follow-on text messages, allowing customers to scan QR codes, and even making a purchase.
The Roku-Shopify partnership should be a win-win situation for both companies, as it opens the doors to a larger set of potential customers for Shopify. At the same time, the deal increases engagement and usability of Roku Action Ads, Roku’s payments network, and the TV streaming experience.
Commenting on the deal, Peter Hamilton, Senior Director of Ad Innovation at Roku, said, “This is a great example of Roku’s unique platform position to make advertisers unmissable across the streamer’s journey, from power on to purchase complete.”
Meanwhile, Mani Fazeli, Director of Product, Checkout at Shopify, said, “Shopify is on a mission to make commerce better for everyone, and by partnering with Roku to make Shopify Checkout available through new channels, we are making it easier for more brands to drive deeper engagement with shoppers and reach new audiences.”
Is ROKU a Buy or Hold?
On TipRanks, ROKU stock has a Moderate Buy consensus rating based on ten Buys, six Holds, and three Sell ratings. The average Roku price target of $68.83 implies 8.8% downside potential from current levels, while the stock has already gained nearly 86% so far this year.
Even so, investors looking for the most accurate and most profitable analyst for ROKU could follow Oppenheimer analyst Jason Helfstein. Copying his trades on this stock and holding each position for one year could result in 73% of your transactions generating a profit, with an average return of an impressive 69.82% per trade.
