Roku Stock Rises in Market Debut

What to Watch for in Roku's $219 Million IPO

What to Watch for in Roku's $219 Million IPO

Roku ( ROKU ) is set to begin trading Thursday morning on the Nasdaq, having raised $220 million from an initial public offering of 15.7 million shares that gave it a market valuation of $1.3 billion.

The initial public offering priced late Wednesday at $14 a share, at the top of the expected range.

At the moment, Roku still makes most of its money from selling streaming players, but with its emphasis on future advertising revenue, Roku has focused on growing its user base through programming - the company has more than 5,000 channels within the US and 3,000 internationally - and hardware.

Now it has to compete with devices from Amazon, Google, and Apple.

Roku, led by CEO Anthony Wood, has also disclosed that its users streamed more than 6.7 billion hours of programming on its platform during the first half of 2017, a 67 percent increase in streaming time from the same period a year earlier. The company plans to make more money for every hour of viewing by selling more advertisements within its platform.

Roku is in the cord-cutting business.

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Indeed, Roku's 32.6% market share of America's 150 million connected TV users a year ago was ahead of Google Chromecast (29.9%), Amazon Fire TV (26.3%) and Apple TV (19.9%), according to research firm EMarketer.

Like many Silicon Valley tech companies entering the public market, Roku is not profitable.

Roku said its future growth depends on TV streaming advertising, which includes ads that appear on its user interfaces as well as video ads delivered to users as they stream content. Although it lacks the deep pockets of competitors such as Apple and Amazon, Roku has received financial backing from a bevy of media conglomerates including 21st Century Fox, Viacom and the Britain's Sky. The reason? Prices for the hardware fell by nearly one-third.

Roku stock is soaring for its Wall Street debut.

Roku said it generated $199.7 million in revenue in the six month ended June 30.

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