Shares of Roku (NASDAQ: ROKU) rose as much as 13.4% on Monday morning, dropping back to a 10% gain by noon ET. The media-streaming technology expert announced an advertising partnership with Amazon (NASDAQ: AMZN).
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This new ad collab is a big deal for advertisers
The new deal gives advertisers access to Roku’s media-playing platform through the Amazon DSP advertising platform. It’s an exclusive partnership with deeper data access than Roku’s existing ad-sales deals, making Amazon’s service the easiest route to placing ads across all of Roku’s original and third-party content services.
The companies said that this combination grows the effective market reach for ad buyers while also placing more varied marketing messages in front of the consumer. Between Roku’s media players and the Amazon Prime Video service, Amazon DSP now reaches 80% of American media households.
What this partnership means for Roku investors
Amazon stock also rose slightly on the news, but the partnership should make a bigger difference to Roku’s business. The company now has direct ad placement deals with the three largest ad management platforms.
After Monday’s price jump, Roku’s stock has gained 42% in 12 months. It still looks quite affordable at 2.8 times trailing sales, despite the company’s habit of delivering year-over-year revenue growth of 15% or more in recent quarters.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Amazon and Roku. The Motley Fool has positions in and recommends Amazon and Roku. The Motley Fool has a disclosure policy.
