Give Roku (NASDAQ:ROKU) credit: the streaming video market is increasingly tight, and it’s holding up well, offering a combination of hardware and content solutions. But its latest move has left the market nonplussed, and shares are down nearly 4% in Wednesday afternoon trading.
Roku rolled out a bold new offer, particularly in a market with as much competition as it has. It outright guaranteed potential advertisers that its programming would reach more households than a one-day flight in primetime than an average program on one of the five leading cable networks. Roku even offers a way to track its progress: those buying ad space simply select a date, and then Roku sets up delivery to reach unique households on the Roku Channel and the additional top 100 channels.
The plan seems to work; one financial services company that remained nameless tried it out, and Roku’s household reach turned out 15% better than its equivalent on a cable network would have been. Given that Roku has 70 million accounts, that may not be such a difficult metric to hit, especially considering what passes for a big deal on cable. The top-rated show on cable television for the week of March 27 was the Women’s NCAA Basketball match between Iowa and South Carolina on ESPN. That pulled in just over 5.17 million viewers, or roughly 7% of Roku’s maximum reach.
Though Roku was on the decline today, analysts are fairly happy with it. Analyst consensus calls Roku stock a Moderate Buy. Plus, Roku stock offers 12.07% upside potential thanks to its average price target of $70.20 per share.
