Report: Roku Eyes IPO

Journal says tech company hires bankers, looks to raise as much as $1B

Internet TV company Roku has hired investment bankers Morgan Stanley, Citigroup and Allen & Co. to investigate a possible initial public offering that could raise as much as $1 billion, according to a report in the Wall Street Journal.

The Journal said according to sources, the offering could come before the end of the year and that preliminary documents for an offering could be filed in the next few weeks. 

Roku had tested the IPO waters in the past. In 2014 it was considering an offering but instead decided to further develop what was then its fledgling streaming video business. Initially a hardware-focused company, Roku has come to rely more and more on ad revenue from its streaming services that offer content from Netflix, Hulu, Amazon and You Tube as well as revenue sharing deals with those companies.

Roku declined comment.

Total revenue in 2016 was about $400 million, and on its website the company said in the first half of 2017, customers streamed nearly 7 billion hours of video and music, up 61% form the prior year.  As of June 30 Roku reached 15 million monthly active accounts, up 43% from the prior year. 

If Roku decides to go through with its IPO, it would be the third in the cable space this year, following WideOpenWest and Altice USA.

Roku has raised money through private sources in the past, and in February was reportedly looking to raise $200 million from private investors that would have valued the entire company at about $1.5 billion. 

According to the Journal, Roku may have some difficulty reaching the $1 billion threshold, mainly because past tech IPOs this year have been a bit disappointing. Snap Inc., the home of Internet social media phenomenon Snapchat, has seen its stock price plunge more than 40% from a high of about $29 per share the day after its IPO to under $17 per share, after one of its underwriters – Morgan Stanley – downgraded the stock, claiming it was “wrong about Snap’s ability to innovate and improve its ad product this year.”