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Roku Shares Surge As Disney, Apple Launches Drive Solid Q4 Revenue Gains

Roku's streaming platform added 4.6 million new customers over the December quarter, thanks in part to new offerings from media giants Disney and Apple.

Roku Inc.  (ROKU)  shares jumped higher Friday after it posted stronger-than-expected fourth quarter revenues, and topped Street estimates for near-term sales, as customers flocked to its streaming service platform amid the launch of new offering from Disney and Apple. 

Roku recorded a narrower-than-expected fourth quarter loss of 13 cents per share over the three months ending in December, as revenues surged nearly 50% to $411.2 million. Roku added 4.6 million new customers over the quarter, the company said, as new offerings from Walt Disney  (DIS)  and Apple Inc.  (AAPL)  pushed the 2019 total to just under 37 million.

Looking into the first quarter of this year, Roku said it expects to book revenues in the region of $300 million to $310 million, and forecast a 2020 total of between $1.58 billion and $1.62 billion, with both tallies firmly ahead of Refinitv forecasts. 

"As new services come on that's good overall for Roku in terms of driving folks to the platform and increasing engagement," CFO Steve Louden told investors on a conference call late Thursday. "And certainly, our business models are set up so that when partners create value on our platform, and we're well positioned to bring them a large audience and best in class tools that that they can create value and we can share in that."

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"We don't talk about specific commercial terms. But certainly, we sign up subscribers for Disney," he added. "And there was dollars in the quarter and dollars in the outlook related to new services like Disney Plus or Apple or others."

Roku share were marked 5.8% higher in early trading Friday to change hands at $146.25 each, a move that would extend the stock's six month gain to around 15%.

Some analysts, however, have noted that Roku is likely to be pressured in the near-term by the launch of streaming services from traditional broadcasters and cable companies such as Comcast CMCSA, which unveiled its free Peacock offering, and the potential for Amazon AMZN to provide a free 'Fire' stick to its Prime customers.

"It was obvious that 4Q was going to be a strong quarter given the favorable backdrop but through 2020 we see a series of announcements that will highlight more competition with increasingly differentiated offerings with little if any upfront fee or on-going additional charge," said Pivotal Research analyst Jeffery Wlodarczak, who carries a sell rating on the stock.

"That could lead to subscriber/ operational Roku hiccups combined with the aforementioned very rich valuation to drive the name to our $60 target by year-end 2020," he added.