Roku Files For IPO, But The Streaming Device Company Isn’t Profitable Yet
Roku, which stands out in the crowded streaming device market that's populated by the likes of Apple, Google, and Amazon, has now filed for an initial public offering. The move makes Roku the most recent major tech company to go public after Snap Inc. in January.
Roku IPO: Everything You Need To Know
The company seeks to raise up to $100 million through the stock sale, although several reports say this is just a placeholder and is expected to change as Roku inches closer toward the IPO date.
Unlike Snap, which is listed on the New York Stock Exchange, Roku is heading to NASDAQ, with the ticker name ROKU. The company has officially filed its S-1 with the Securities and Exchange Commission on Friday, Sept. 1 — the very first step for a company that wants to go public.
In July, reports suggested that Roku was planning for an IPO in 2017. Roku's products, composed of some inexpensive streaming sticks that plug into your TV so you can access Netflix and YouTube on the big screen, have the largest market share in the streaming hardware landscape — surpassing Google Chromecast, Amazon Fire TV, and Apple TV, according to an intelligence firm.
Streaming devices are popular among a subculture of media consumers called cord-cutters, many of which, if not all, have dropped their traditional cable patronage for Netflix, Amazon, or Hulu subscriptions — or all three, sometimes more. Roku ranks first in terms of total hours streamed, which is in part thanks to its inexpensive streaming sticks.
Roku Isn't Profitable Yet
Roku, however, isn't making a profit yet. As Fortune reports, the company lost $42.8 million in the fiscal year of 2016, and it reported a net loss of $24.2 million in the first half of 2017. Roku is losing money because it's spending tons on research and development — it laid out $48.1 million on R&D in the first half of 2017, which is 25 percent higher than last year in the same period.
But R&D is a necessary evil for every company. Apple too spends tons of money on research. It even has dedicated departments for artificial intelligence experiments and such. It's easy to imagine that Roku will benefit from this increasing trend toward cord-cutting, as video streaming services provide more compelling content.
Roku Aims For A Dual-Class Stock Structure
Roku intends to give more power to investors before the IPO instead of newer ones should it go public, which it'll do via a dual-class stock structure. This will lend its current shareholders, including the CEO, to have more control after the public offering. Current investors will get a new class stock that gives them 10 votes per share. Shares sold in the public offering only gives owners one vote per share.