Analyst Says Roku's Post-Earnings Bump Won't Last

TV streaming company Roku Inc ROKU, which IPO-ed in late September, released its first quarterly report as a public company after the close Wendesday.

Roku stock is on a tear in reaction to the results.

The Analyst

Tigress Financial's Ivan Feinseth offered his take on Roku's maiden quarterly report.

The Rating

Tigress remained Neutral to Negative on the stock.

The Thesis

Roku shares would trade higher in pre-market on better-than-expected results, achieved on the back of strong user growth and advertising revenue, Feinseth said, offering his take on the results.

The company reported 40 percent year-over-year revenue growth to $124.78 million against a $110.47 million consensus estimate. Among other metrics, gross profit almost doubled to $49.9 million, active accounts rose 48 percent, streaming hours jumped 58 percent and average revenue per user increased 37 percent.

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Roku guided its full year revenues to over $500 million, up from $400 million last year and above the consensus estimate of $485.5 million.

"I am skeptical of Roku's ability to sustain its growth," Feinseth said.

"There are so many sources of competition to access media content."

Price Action

Roku is one of the newbies on the Street that have fared relatively well. After debuting with a gain of 68 percent, the stock rose to a high of $29.80 (intraday basis) Sept. 29 but came off the level subsequently. Roku is safely treading above its offer price.

In pre-market trading, shares of Roku were rallying 31.90 percent to $24.85, adding to the 30.73 percent rally on Wednesday that came ahead of the quarterly report.

Feinseth said he stock will move down after the initial euphoria.

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