ROKU's surge may imply M&A opportunity!
Yesterday, $iRobot Corp.(IRBT)$ experienced a sharp decline in the closing hours of trading due to a warning from the European Union regarding potential anti-competitive practices. This warning could pose a threat to the market, and $Amazon.com(AMZN)$ has not yet made a statement on the matter, indicating that it may not be relevant to them. However, this warning could have a significant impact on IRBT, as its survival may depend on the success of the acquisition.
Therefore, I am not optimistic about this case, and even if it did, Amazon may cut the tender price again.
On the other hand, $Roku Inc(ROKU)$ rose by 7.2% yesterday, leading the growth of the second-tier market. This is partly due to an upgrade in ratings after their financial report, with many analysts raising their expectations. Additionally, the advertising industry is showing signs of improvement.
Before the Q3 financial report, the closing price was $59.7 per share, and it is currently at $102.98 per share, representing a 72% increase.
I believe that the biggest positive news is the crackdown on password sharing by streaming media companies such as $Netflix(NFLX)$ and $Walt Disney(DIS)$
Essentially, this crackdown converts a single account/device into multiple devices (which can be achieved through lower-priced packages), thereby passively increasing the number of times users open their devices and increasing default viewing time (because there is no conflict). After all, for CTV advertising, opening times and viewing time are essential.
Of course, the "unexpected" improvement in fundamentals may have already been reflected in the Q3 financial report's significant increase in stock price.
So what else can support Roku's continued growth? Perhaps it is the potential for acquisition.
Since Roku's business is relatively single-focused, its ability to resist risks is not strong. However, if it were part of a larger corporation, it might be able to achieve better synergies. After all, it is also a leading provider of smart TV operating systems in the United States and other countries.
So which giants could make acquisition offers?
$Amazon.com(AMZN)$ , $Alphabet(GOOG)$ $Alphabet(GOOGL)$ already have similar business, so synergies may be limited.
$Microsoft(MSFT)$ is quite irrelevant, and they are currently focused on taking OpenAI.
$Apple(AAPL)$ and $Netflix(NFLX)$ both of which have streaming media businesses that are directly related and complementary to Roku's business, could be potential acquirers. The key is to see how much synergy can be generated.
$Meta Platforms, Inc.(META)$ is focused on creating a metaverse and has a strong presence in VR and advertising, making it another potential acquirer to expand its business lines.
Of course, these are only speculations, and any actual acquisition news will undoubtedly be unexpected.
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