UPDATE: Roku IPO: 5 things to know about the streaming device company
By Max A. Cherney
Device revenue slows as discounts, advertising sales grow
Streaming software and device manufacturer Roku Inc. priced its initial public offering at $14 a share late Wednesday, at the high end of its range. The stock began trading Thursday morning on the Nasdaq exchange under the ticker "ROKU," and shares gained as much as 30% in initial trading. (http://www.marketwatch.com/story/roku-up-more-than-12-in-initial-trade-after-ipo-2017-09-28)
Roku raised $219 million in funding at a valuation of $1.3 billion (http://www.marketwatch.com/story/roku-sets-14-per-share-ipo-price-on-13-billion-valuation-2017-09-27) in the offering. The streaming device maker sold 9 million shares for $126 million, while early investor Menlo Ventures sold 6 million shares for $84 million and Sky Ventures Ltd. sold 668,000 shares for $9 million. Underwriting banks have access to another 2.35 million shares that they could sell in the offering, which would be split between the company and selling stockholders, according to a filing with the Securities and Exchange Commission (https://www.sec.gov/Archives/edgar/data/1428439/000119312517275689/d403225ds1.htm)..
The Los Gatos, Calif.-based company got its start as a unit of Netflix Inc. (NFLX) in 2007 and was at one time given the secret code name of "Griffin," after Tim Robbins' character from the film "The Player," according to Fast Company (https://www.fastcompany.com/3004709/inside-netflixs-project-griffin-forgotten-history-roku-under-reed-hastings). But the streaming giant sold its stake in 2009, in part because it was concerned about competing with hardware partners such as Apple Inc. (AAPL) .
The IPO filing is not exactly a surprise, and though the company had initially considered filing a secret IPO (https://www.wsj.com/articles/roku-working-on-plans-to-file-confidentially-for-ipo-1414180406), it abandoned those plans (https://www.wsj.com/articles/roku-expects-to-launch-ipo-before-year-end-1499976409) and was rumored to launch its offering before the end of this year at a $1 billion valuation. Morgan Stanley (MS) , Citigroup (C) , and Allen & Co. are listed as underwriters, according to the filing.
It's coming at a time of outperformance for the technology sector, as the SPDR Technology Select Sector exchange-traded fund (XLK) has climbed 5.4% over the past three months through Tuesday, while the Dow Jones Industrial Average has gained 4.6%.
Here's what you need to know: