Roku Stock Jumps 20% — Is a Sale Coming?

TLDR

• Roku stock jumped 20% to $143.66 on Friday, its highest close since February 2022
• Bloomberg reported Roku is in early-stage talks with at least one U.S. media company about a potential sale
• No final decisions have been made and no certainty a deal will happen
• Roku surpassed 100 million users and beat Q1 expectations, with ad revenue up 27% and subscription revenue up 30%
• 25 of 29 analysts rate the stock a Buy, and it’s up 32% year-to-date

Roku (ROKU) stock surged 20% on Friday to close at $143.66, its best single-day gain since 2023 and the highest closing price since February 17, 2022.

Roku, Inc., ROKU

The jump came after Bloomberg reported that Roku is exploring a potential sale and has held discussions with at least one major U.S. media company about a possible combination.

The report noted the talks are in early stages. No final decisions have been made by Roku’s management or its board, and there is no certainty the discussions will lead to a deal.

Roku did not immediately respond to requests for comment.

The stock has climbed 10% in June alone, and is now up 32% so far this year. Over the past 12 months, ROKU is up 93%.

After-hours trading extended the gains following the Bloomberg report.

Strong Q1 Numbers Behind the Stock

Before Friday’s move, Roku had already been building momentum. On April 30, the company beat Wall Street’s first-quarter expectations and raised its full-year guidance.

Advertising revenue rose 27% year-over-year in Q1. Subscription revenue climbed 30%.

For the full year, Roku is guiding for EBITDA of $675 million on revenue of $5.54 billion.

The company also confirmed earlier this year that its platform has crossed 100 million active households. It said its devices are used by more than half of all U.S. broadband households.

Roku has also been expanding outside the U.S., with continued growth in Canada, Mexico, Brazil, the UK, and Latin America.

Wall Street Leans Bullish

Analyst sentiment heading into Friday was already positive. Of 29 analysts covering the stock, 25 rate it a Buy, three rate it a Hold, and one rates it a Sell, according to Koyfin.

Roku’s main hardware competitors include Amazon’s Fire TV, Google TV, and Apple TV. Amazon said in February that it has sold more than 300 million Fire TV devices to date.

Roku generates revenue through hardware sales, licensing its operating system to TV manufacturers, advertising on The Roku Channel, and taking a cut of subscription purchases made through its platform.

The Bloomberg report did not name any specific company as a potential acquirer.

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