Roku Inc ROKU shares are volatile Wednesday following Netflix Inc’s NFLX quarterly results. Roku is well positioned to benefit from strong advertising trends from Netflix and other streaming companies.
What Happened With Netflix: Netflix’s fourth-quarter revenue increased 12.5% year-over-year to $8.83 billion, which beat the consensus estimate of $8.72 billion. Earnings of $2.11 per share fell short of estimates of $2.21 per share, according to Benzinga Pro.
Netflix said it had 13.12 million paid net adds in the fourth quarter, up from 7.7 million in the prior year's quarter. The company ended the quarter with 260.28 million global subscribers, up 12.8% year-over-year.
One of the keys for Roku was that Netflix said it will continue to build out its ad-supported tier as it aims to make ads a more substantial revenue stream in the coming years.
Roku creates revenue opportunities with streaming companies through partnerships and advertising. The company operates one of the top advertising distribution platforms and is well positioned to capitalize on the growth of streaming. Last year, Netflix was reportedly considering a takeover of Roku, but a deal never materialized.
Netflix shares were last up more than 13% following the streaming giant’s strong quarterly results. Roku shares were up more than 3% before pulling back in early trading. Roku is expected to report fourth-quarter financial results in early February, although a date has not yet been confirmed by the company.
ROKU Price Action: Roku shares had given back most of the gains by publication time. The stock was up 0.12% at $91.08 at last check, per Benzinga Pro.
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