Here's Why Large Shareholder Ark Invest Is Bullish On Potential Roku And Netflix Merger

Zinger Key Points
  • Talks of a potential takeover by Netflix have circulated through Roku, according to sources.
  • Roku has 61.3 million active accounts and operates the No. 1 TV operating system in U.S., Canada and Mexico based on hours streamed.

Shares of streaming platform company Roku Inc ROKU hit one month highs last week on the heels of a Business Insider report suggesting the company was an acquisition target by streaming giant Netflix Inc NFLX.

Here’s why Ark Invest is bullish on the potential combination of the streaming companies.

What Happened: A report from Business Insider said Roku “abruptly” closed the employee window for trading of stock. Talks of a potential takeover by Netflix have circulated through the company, according to sources.

Roku offers streaming platforms to consumers and also provides revenue opportunities with streaming companies through partnerships and advertising.

Ark Invest, which counts Roku as a top holding, commented on a potential tie-up of the two companies.

Related Link: 3 Reasons Why This Analyst Thinks A Netflix-Roku Deal May Not Materialize 

What Ark Thinks Of Potential Deal: Netflix could be looking toward acquisitions to help boost its growth after reporting a loss of subscribers in the recent quarter.

“In our view, Netflix would gain much more than Roku in such a deal,” Ark Invest Associate Portfolio Manager Nicholas Grous said.

Roku has 61.3 million active accounts and operates the number one TV operating system in the U.S., Canada and Mexico based on hours streamed.

“With a robust advertising business in the connected TV space, Roku could fast-track Netflix’s ambitions. Additionally, Netflix might be looking at broader play in the TV space, with Roku an ideal entrée.”

Grous sees the deal as being more beneficial to Netflix in part because of the vast number of subscription and video-on-demand services offered that are all potential partners for Roku.

Roku could be better off signing an advertising partnership, Grous said. A potential tie-up is still attractive to the portfolio manager.

“Roku is in the process of rebuilding the TV ecosystem on digital rails, becoming a new-age gatekeeper in the burgeoning digital entertainment space, and replacing the need for broadcast and cable companies.”

Roku is the third-largest holding in two Ark Invest ETFs. Roku makes up 8.3% of assets in the Ark Innovation ETF ARKK and makes up 8.0% of assets in the Ark Next Generation Internet ETF ARKW.

Ark owns more than $750 million of Roku shares across the two ETFs.

ROKU Price Action: Roku shares were down 11.44% to $73.25 on Monday at market close, hitting new 52-week lows versus a 52-week range of $75.03 to $490.76.

Posted In: Ark FundsARK InvestBusiness InsiderNicholas Grousstreaming platformsstreaming stocksEntertainmentNewsTop StoriesTrading IdeasGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.