When the Golden Globes are awarded on February 28, the streaming services could win big. This is especially true for Netflix: The industry giant is happy about 20 nominations, including the biopic "Mank" by star director David Fincher, which also counts as an Oscar candidate. But Amazon Prime, Disney+ and AppleTV + are also entering the race for the important US film and television award with hot irons. What is certain is that the 78th edition of the Golden Globes will provide further evidence of the huge rise in importance of streaming providers. During the Corona pandemic, more people than ever discovered this form of entertainment around the globe. The "stay-at-home" boom has not only hit Netflix & Co. Roku was also among the profiteers. The US company sells set-top boxes, which allow the various services to be brought compactly onto the TV set. In addition, the Californians operate their own streaming channel.
In 2020, business was humming in both segments. For Q3, Roku reported 46 million active accounts - up 43% year-over-year. Users accessed the various programs for a whopping 14.8 billion hours. This means that "streaming hours" increased by more than half compared to Q3 2019 (see chart). According to management, the platform business also benefited from strong growth in advertising revenue as well as the expansion of its network of content partnerships. Overall, Roku posted revenue growth of 57% to USD 1.13 billion for the first 9 months of 2020, with around 70% of revenue coming from the platform business. In Q4, this ratio should be around two-thirds, according to CEO Anthony Wood. At the same time, the company's founder held out the prospect of revenue growth in the mid-40% range. While Wood predicted a gross margin close to breakeven for the "player" segment, he expects a figure between 55% and 60% in the platform segment.
After deducting development, marketing and administrative costs, Roku is deep in the red. In the first 3 quarters of 2020, the operating loss was USD 85.4 million, almost 80% more than in the previous year. Investors apparently aren't bothered by that. In fact, as a classic growth stock and a major player in the ongoing disruption of the media world, Roku stock is riding high: over 12 months, the Nasdaq stock is up close to 240% (see chart). The rally comes under scrutiny on February 18. That's when the company reports Q4 and full-year 2020 numbers. Netflix delivered a stellar performance in January. The industry behemoth added 8.5 million new users in the final 3 months of last year, beating expectations by more than a third.
Just in time for the upcoming payment date, Leonteq has issued two Softcallable Barrier Reverse Convertibles on Roku. In both product currencies CHF and USD, this underlying makes high coupon payments of 16.40% p.a. and 17.60% p.a. respectively possible. In both variants, the barrier is fixed at 55% of the initial level. As long as Roku does not fall to or below this level in the next 15 months, investors will receive the full nominal amount back at Final Maturity. If the cushion is not sufficient, the partial protection expires. From that moment on, the Barrier Reverse Convertible would be exposed to the full price risk of the Roku share. Important: Due to the soft callable feature, early termination of this issue is possible. If Leonteq makes use of this option on the quarterly observation days (for the first time after 6 months), product holders will receive a pro-rata coupon payment in addition to the nominal value within a few days.
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