Needham Lists Four Trends Aced By This Netflix Spin Off

Needham analyst Laura Martin saw Roku, Inc ROKU as a pure-play way to invest in the growth of the U.S. over-the-top (OTT) and connected-TV (CTV) ecosystems.
Martin believed that Roku's advertising addressable market (TAM) in the U.S. is the $60 billion of U.S. traditional linear TV advertising revenue reported in 2021 plus TAMs it adds over time.
Roku devices were in 61 million homes as of March 30 and reached about 150 million U.S. consumers, making Roku the most significant premium long-form film and TV content platform for CTV ads.
Martin listed four trends aced by Roku:
- Martin saw The Streaming Wars won by ad-driven business models, as "free" always has the largest TAM.
- In the EU and U.S., consumers who voluntarily "opt-in" were most valuable, as per Martin.
- Martin believed that U.S. streaming is mature, so minimizing churn is the most critical upside value driver.
- AdTech is converging with streaming, making the tech stack as necessary as content for minimizing churn, Martin said.
Martin believed Netflix, Inc NFLX spinoff Roku and Netflix CEOs were constantly in touch.
Martin reiterated a Buy on Roku with a price target of $205.
Price Action: ROKU shares traded higher by 8.52% at $89.44 on the last check Tuesday.
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