ROKU Surges on YouTube Kiss n' Makeup
Ad-tech and E-comm plays are coming back as we head into prime shopping & binging time.
Roku ROKU bulls woke up to some great news on Wednesday and got to enjoy a nearly 20% surge in shares.
The stock opened at $236 and made its way to $260 after lunch time on word that Google made nice and decided to let YouTube remain on the streaming platform.
"Effective today, we have agreed to a multi-year extension with Google for YouTube and YouTube TV," Roku said on Twitter. "This agreement represents a positive development for our shared customers, making both YouTube and YouTube TV available for all streamers on the Roku platform."
The two digital media brands have not been on good terms ever since disagreeing earlier this year on the advertising revenue split. In April, Roku removed the YouTube TV app from its channel store after they couldn't reach what's known as a "carriage deal."
And according to CNBC reporting this morning by Julia Boorstin and Alex Sherman...
"Roku asks for a percentage of advertising inventory to sell to its customers in each carriage deal it negotiates. YouTube, the second-most-visited website in the world, dominates streaming viewing and has the popularity to push back on Roku’s demands. Roku claimed Google required it to preference YouTube content over that of other providers in the company’s search results."
You're Watching What?
Sounds like a good deal for both. In the video that accompanies this article, I admit that I didn't even know my family was watching YouTube on our Roku TV.
Since I don't watch much TV, all I care about is the "connected-TV" advertising success of one of my favorite companies, The Trade Desk TTD.
I've been recommending buys in The Trade Desk under $100 for the past two weeks and those opportunities may soon be over. I call them the "CME of advertising" because of their model for targeted, data-driven, programmatic ad buying, just like the algo hedge funds we trade against every day.
Back to the Roku-YouTube tiff, what I still don't know is if Google runs ads like we typically see from the YouTube algorithm. I guess I'll have to watch and find out.
And while I think this was a smart move for Google, it was a lucky break for Roku because without YouTube they would be at a competitive disadvantage since Amazon Fire TV and Apple TV both offer it.
Apparently, Google was about to drop Roku tomorrow December 9, right into the heart of holiday shopping which is being done increasingly from the tube, via the couch.
Pinterest Is Building Something for Creators
Speaking of YouTube and shopping, one of my favorite bargains right now is Pinterest PINS. The social-dreaming board is make inroads into E-commerce and their next major initiative to monetize "pinners" is to expand video capabilities on the platform.
Pinterest management made a big leap in this regard less than two months ago. As Variety reported exclusively on October 25...
YouTube Head of Content Partnerships Malik Ducard Exits to Join Pinterest
Then in November, they launched "TwoTwenty," an experimental products team and in-house incubator. Here's how they described it...
"With thousands of experiments running weekly and the latest in computer vision and machine learning powering technology like camera search, inclusive products and live shopping, innovation is built into the Pinterest DNA. Today we’re officially announcing an extension of that spirit with a new team. Named after the address of the first Pinterest office, TwoTwenty is an incubator team made up of engineers, designers, and content and product experts dedicated to the rapid testing and launching of new ideas like Pinterest TV."
I'm sure this was in the works before Malik dropped anchor, but I bet he's heavily involved as he basically made YouTube what it is with content and partnerships.
Then this week, Pinterest made a key acquisition for creators with the purchase of video platform Vochi for an undisclosed sum. Here's what I wrote to my TAZR Trader group this morning, where we own PINS shares...
In a Monday company blog post, Pinterest said, "We're announcing that we've acquired Vochi, a video creation and editing app focused on democratizing quality tools for creators. Acquiring Vochi is part of our commitment to helping creators bring more quality video content to Pinterest. Having more inspiring content can provide Pinners with more ways to watch, make and shop creator ideas. The Vochi app will continue to be available as a standalone app for now. We're looking forward to working with the Vochi team and building more innovative creator tools together."
As we've been talking about, PINS is on a big push to make video a durable and enriching part of the platform. They are creating their own "creator economy" to rival and sync with YouTube, especially after snatching the leader of YouTube success for the past decade Malik Ducard and making him PINS first chief content officer.
Let's Get Shopping!
Finally in today's Cook's Kitchen, I check in with another favorite E-comm platform, BigCommerce BIGC. We've been buying it near $40 and added more today on this catalyst...
Bank of America initiates coverage of BigCommerce with a Buy rating and $66 price target: Analyst Koji Ikeda wrote in his report "The company screens well in terms of its ability to generate healthy growth trends for the foreseeable future, its relatively smaller exposure to transactional volume volatility, and its ability to address B2C and B2B customers at the same time. Management is viewed as leaders in the end-market."
I wonder if the analyst was referring to greater exposure to "transactional volume volatility" for the bigger platforms like Amazon, Alibaba, and Shopify SHOP.
In my video last Wednesday, Growth Stock Meltdown: ROKU and PYPL vs. NVDA and TTD, I said to watch Shopify for some buy opportunities under $1400 after dropping from new highs above $1700.
You got your shots on Friday and Monday with solid "target locks" near $1350. Unfortunately, I missed it. Let me know if you didn't miss.
And while I told you I couldn't reco buying ROKU near $200 because I didn't understand the opportunity that well, I did say to take a shot on TTD under $95.
The main message is to put your money where your homework is. In other words, you'll always have more conviction in companies you dig into and understand better.
Disclosure: I own TTD, BIGC, and PINS for the Zacks TAZR Trader.
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