Dogecoin is just bark, not a bite – this growth stock is a better buy

May was a tough month for crypto investors. A whirlwind of news about Elon Musk and China sparked a crash that wiped out nearly $ 1 trillion in market value. And Dogecoin (CRYPTO: DOGE) was no exception. The meme-inspired cryptocurrency has fallen over 50% from its peak as of this writing.

Market slumps are often a good buying opportunity – this is not the case with Dogecoin. Instead, investors should consider buying year (NASDAQ: ROKU). The company recently delivered strong first quarter results and its future prospects look promising. Investors should know that.

Dogecoin

By now you’ve probably heard stories of Dogecoin millionaires, the lucky few who made the meme currency rich. Here’s my advice: stop reading these stories. They make Dogecoin seem enticing – if other people are lucky, so could you, right?

Image source: Getty Images.

Unfortunately, the truth is far less inspiring: Dogecoin was a joke, and there’s nothing special about it.

Dogecoin is not the most valuable cryptocurrency like Bitcoin, it doesn’t support smart contracts like etherLike, it wasn’t designed for anonymity Ox, it doesn’t have the transaction capacity of Speckle – and the list goes on. In fact, virtually all of Dogecoin’s success can be traced back to social media, not some underlying technical genius.

Dogecoin was founded with the kind permission of Twitter. In 2013, Jackson Palmer toggled between two tabs on his browser: one was the popular crypto site CoinMarketCap and the other was a news article with the Doge meme. As a joke, he combined the two in a now famous tweet: “Investing in Dogecoin is pretty sure it’s the next big thing.”

From then on, the Reddit community joined in, and meme currency became a popular way to tip users. Then, in April 2019, Elon Musk jumped on board and tweeted that Dogecoin might be his favorite cryptocurrency. From there the hype snowed and voila! Dogecoin became a sensation. Over the next two years, the price skyrocketed by over 24,000%.

But that doesn’t change the facts: there is still nothing special about this cryptocurrency.

Does that mean the price will continue to fall? I can’t know – nobody knows the future. But I think there are better places to invest your money.

year

Roku is the leading streaming platform in the US in terms of both total viewers and streaming hours. Its ecosystem of devices, connected TVs (CTVs), and content has helped the company build a massive, highly engaged user base.

As a result, Roku dominates the CTV advertising market. In the fourth quarter of 2020, Roku devices generated 46% of all CTV programmatic ad spend, while Samsung took second place with 11% and Apple Third place with 9%. In fact, Roku had more market share than the next nine companies combined.

Roku television mounted on a blue wall over a wooden table.

Image source: Roku.

So what is driving this success? One of the main advantages of Roku is The Roku Channel, its ad-supported streaming service with over 50,000 free titles. The company has made significant efforts over the past few years to add more content to the Roku Channel in order to improve and expand its quality.

To that end, it added more than 100 live TV channels and a live TV channel guide in 2020, and the company even launched the Roku channel AmazonFire TV platform. It also debuted in May 2021 with 30 “Roku Originals” with content acquired from Quibi.

Put simply, this is the motivation for engagement. In the first quarter, streaming hours on The Roku Channel grew twice as fast as the entire Roku platform. More importantly, 85% of adults (ages 18 to 49) who tuned in to the Roku Channel can no longer be reached on traditional television.

As a result, marketers are throwing money at Roku to reach this important audience. Ad impressions on Roku’s platform more than tripled during the quarter and gross profit rose 132%, a significant acceleration from the 63% growth in 2020.

But strong financial results are nothing new to Roku. The company has seen impressive growth over the long term.

Metric

2017

Q1 2021 (TTM)

CAGR

revenue

$ 512.7 million

$ 2.03 billion

53%

Free cash flow

$ 28.1 million

$ 157.3 million

70%

Source: Roku SEC filings. TTM = follow-up 12 months. CAGR = average annual growth rate.

Looking ahead, Roku has barely scratched the surface of its market opportunities. In 2020, over-the-top (OTT) ad sales in the US reached $ 3.8 billion, which is only 7% of total TV ad spend, according to Magna. But more viewers should cut the cord in the years to come, which means more marketing money will be shifting to CTV platforms. As the market leader, Roku is well positioned to take the lion’s share.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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