Roku spikes more than 10 percent on opening day of trading

What to Watch for in Roku's $219 Million IPO

Roku just priced its IPO at the top of its range, fetching a $1.3 billion market cap before trading on Thursday

It's hoping to grow the number of hours streamed by each user, and monetize the hours through advertising, according to its prospectus.

A pioneer in helping consumers cut the cord from traditional cable, Roku made one of the first devices to offer streaming content such as Netflix over TVs.

Now it has to compete with devices from Amazon, Google, and Apple.

With all three offering boxes for streaming videos features the most popular apps such as Hulu and Netflix.

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One thing long-term investors will want to watch closely is Roku's transition from hardware-generated revenue to subscription revenue.

Roku has priced its initial public offering at $14 per share as it seeks to become the "TV streaming platform that connects the TV ecosystem". Roku does make money by sharing advertising revenue with some of the apps it carries.

Shares of Roku jumped more than 50% above its IPO price as of midday trading Thursday, indicating strong investor demand for the streaming device company. Although it lacks the deep pockets of competitors such as Apple and Amazon, Roku has received financial backing from a bevy of media conglomerates including 21st Century Fox, Viacom and the Britain's Sky. To date it has raised $200 million in funding.

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Roku announced that it had generated revenue of just over $199.6 million during the six-month period ending on June 30.

The company brought in $399 million in revenue in 2016, but lost $43 million.

"That's great growth for them, but that playbook can also be copied", said Kathleen Smith, principal at Renaissance Capital. "We're seeing a lot of "me too" ideas".

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