Roku IPO Priced at $14, Values Firm at $1.3B

Roku Roku TV IPO

Shares of Roku Inc (ROKU.O), a Fox-backed video streaming firm, rose as much as 16.6 percent in their market debut on Thursday, giving the U.S. IPO market a much-needed shot in the arm. Shares opened for trading at $15.78 a piece. Roughly 39 million people used a Roku device at least once during the month compared to 37 million who used Chromecast, 36 million who used Fire TV and 21 million who used Apple TV.

This places a value on Roku of $1.3 billion. The company aims to increase advertising sales through the platform, which is a higher margin business than devices.

Consumers are already seeing what happens when one of the big three Roku rivals decides to protect its content: Google on Tuesday blocked Amazon's Echo Show, a smart speaker with an LCD touchscreen, from streaming YouTube.

The Fox-backed company offered 15.7 million shares at $14, pegging its valuation at $1.32 million. Roku claims to have just over 15 million active accounts, which made just under $400 million in revenue in 2016.

Roku admitted that the majority of the hours streamed on its platform have consisted of subscription video on demand content from partners like Netflix, which contribute little revenue to Roku.

Roku users during the first half of 2017, streamed over 6.7 billion hours on its platform, the company announced.

Even though CEO Wood isn't anxious about his company's ability to compete, investors will have to decide if Roku's market share and option-oriented platform are enough to set the streaming device maker apart.

Roku previously raised more than $200 million from investors such as News Corp, Viacom, Sky and Hearst. Roku has also seen increasing competition from companies like Apple, Google and Amazon, which all sell their own streaming TV devices.

Roku investors have to hope the company's perception on Wall Street doesn't go the way of Snap or Blue Apron - businesses whose ideas can be easily replicated by a deep-pocketed competitor.

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