Naturally, Roku and Netflix have taken various approaches to cashing in on the boom in streaming. When it comes to streaming services, Netflix is the undisputed top dog, with almost 193 million paying memberships internationally. When it comes to paid customers, nobody else is even near. Roku is the leading portal that offers access to thousands of content for its users, including Netflix. It’s the smart-television manufacturers’ operating system of choice, and its steadily expanding user base is up to 43 million accounts. Both win different games being played in the same arena, and that doesn’t seem to stop soon anytime soon.
Making your streams come true :-
Patterson thinks both stocks are offering plenty of upside at the heightened share rates even today. He sees new advertising in Roku and the ad-supported platforms of the business driving stronger top-line development than anticipated by Wall Street. In the form of international growth and the eventual revival of the ad market that has already held up better for the connected-TV industry, he sees new catalysts. His current street-high $228 price target means a 45 percent increase from Monday’s close.
The upside of his call for Netflix is a little less ambitious. On Netflix, Patterson’s $590 price target is just 24 percent above where the shares are now, but on the operation, he’s still bullish. He supports Netflix’s market strength, as since early 2014, the network has been able to carry out four price rises in the U.S. Not only has the pandemic sped up the migration process to streaming services in general, but particularly Netflix. Its leadership in over-the-top video is obvious, and Netflix is nicely setting the path to long-term free cash flow growth.
Naturally, both companies have made the most of the COVID-19 crisis shelter-in-place era, but these patterns won’t be reversed once we’re out in the wild again. Folks have become familiar with the ease of watching content from home as well as the ever-widening content catalog. This isn’t a fluke. Most of the country’s movie theaters are now open but we’re still not going to the multiplex. Folks are still cutting the cord with cable and satellite TV subscriptions slipping despite spending the past few months collectively at home with nothing to do.
Netflix’s going to win. The price goals for Patterson mean that Roku will win even more, and that makes sense. Roku is smaller than Netflix, and it may seem easier to penetrate or replicate its moat, but it’s growing significantly faster as well. In its latest quarter, Roku’s revenue grew 42 percent, relative to Netflix, with its top-line growth of 25 percent.
It’s not a competition between Roku and Netflix. You can own both of them, and because they’re both among the best growth stocks on the market, it’s probably not a bad idea if you believe that streaming video will continue to build on its potential popularity. It only makes sense that you can devote more of your portfolio to the stocks leading to revolution if you spend more and more time streaming media.