Fueled by the pandemic, Roku’s audience is growing

The Motley Fool’s Take

Roku is a top streaming hub whose stock has surged in recent years. It has no problem selling its dongles at a loss, as its deals with smart TV makers make it the default operating system for 38% of smart TVs shipped in the United States.

Building its audience base is everything, and the pandemic has helped Roku’s audience grow faster. The 56.4 million active accounts it had at the end of September represented a 23% increase over the previous year.

People turn to Roku as a free hub to launch thousands of available streaming services, while Roku generates money from the advertisements it shows them. Average revenue per user increased by 49% over last year. Streaming hours served by Roku have jumped 75% in the past two years.

Roku only scratches the surface when it comes to monetization. It’s started securing original content, rewarding its growing base with shows and movies they can’t get anywhere else.

There are risks here, like Roku’s share price, which despite recently falling 52% from its 52-week high, still has a triple-digit price-earnings ratio. But as long as Roku continues to be a leading streaming service company, its future looks bright – and long-term investors might consider it for their portfolios. (The Motley Fool owns stock and recommended Roku.)

ask the fool

From SH to Mobile, Alabama: Can you explain what mortgage “points” are?

The madman responds: One point corresponds to 1% of a home loan. So if you borrow, say, $300,000 to buy a house, one point would be $3,000. You are more likely to encounter “cash points”, which are points you can choose to pay in order to reduce the interest rate on your loan. This will reduce the total interest you will pay over the term of the loan and lower your monthly mortgage payment.

It’s often not worth paying points if you’re not likely to be in the house for many years or if you have an adjustable rate mortgage (not a fixed rate). If you pay, say, $6,000 in points to lower your rate but sell the house three years later, you probably won’t have saved enough to offset that $6,000 cost. And points paid on adjustable rate loans usually only affect the initial rate, saving you less in the long run. Points paid to lower your interest rate are generally tax deductible, but you can only deduct them in each year that you would have paid the interest.

You may also encounter “origin” points, which are fees charged by some (but not all) lenders for work done on your mortgage. They are not tax deductible.

Online calculators like those at Fool.com/calculators can help you determine if paying points is a smart move for you.

From FE to Grafton, Vermont: Where can I find out what percentage of a company’s stock is held by insiders?

The madman responds: Try asking the company itself by contacting its investor relations department. Or check out a financial website such as Finance.Yahoo.com, where you can search for information about the company, including its major shareholders.

school of fools

It’s no secret that health care costs have skyrocketed over the past few decades and many Americans have found themselves with massive and unmanageable medical bills. Here are some ways to avoid finding yourself in this situation or to deal with it if you are already there.

Prepare an emergency fund. Most of us should have at least three months of living expenses in an accessible account, possibly six months or more. It can keep your household afloat in the event of an unexpected job loss, expensive repair bill, or major medical bills. At the bare minimum, be prepared to pay your health insurance plan‘s deductible.

Forecast expected health care expenses. Not all medical bills appear suddenly – many are common or expected, such as doctor visits for illnesses, upcoming surgeries or dental work. Plan and save for these expenses as you would for other household expenses.

Use flexible spending accounts or health savings accounts. These allow you to set aside pre-tax dollars to spend on eligible health care expenses such as doctor visits, lab work, and prescriptions. Learn about each of them to see which one will serve you best.

Ask for generic drugs. If you don’t ask, you may be prescribed an unnecessarily expensive medication.

Read all medical bills carefully. It is not uncommon to find incorrect charges, and sometimes even to be charged twice. If you haven’t received an itemized bill, request one. Then, do some research to make sure the charges are correct – and definitely request that any incorrect charges be corrected.

To negotiate. Not all charges are set in stone. Many healthcare providers, both doctors’ offices and hospitals, will work with you if you are unable to pay your bill in full and on time. They might lower the bill or set up a payment plan for you. This tactic doesn’t always work, but it’s worth a try.

My dumbest investment

From R., online: Many years ago I was not an investor, other than trying to pay for a small farm that I purchased. My son called from college and said, “Dad, you need to buy some Lucent stock. You will earn enough money to be able to buy diamonds as big as horse poop. The imagery appealed to me, so I did some cursory research and bought $1,000 worth of Lucent stock. It started going down, so I bought another $500; lower, I bought $500 more. I could have made four agricultural payments with that money. The vision of the diamond faded. Eventually, I sold the shares. I’m still not an investor, but I bought a few stocks, researching them thoroughly before hitting “buy”. I’m well. And my farm is paid.

The madman responds: Lucent was spun off from AT&T in 1996 as a standalone communications equipment company. At one time, it was among the most widely held stocks in America and its price skyrocketed along with other tech companies. Amid general investor euphoria over a booming stock market, many failed to notice Lucent’s deteriorating balance sheet and question the costly acquisitions. The more you dig into a company before you buy, the better – and it’s important to keep track of your holdings. Also, think twice before doubling down on a falling stock, as stock prices often fall for good reasons.

Who am I?

My roots go back to the introduction in 1970 at a weightlifting convention of exercise machines called Blue Monsters, with a key part in the shape of a spiral mollusk shell. I was sold in 1986 to a guy who filed for bankruptcy in 1990. My expansion into medical equipment failed. Today, based in Vancouver, Washington, and with a market value recently approaching $185 million, my brands include Bowflex, Schwinn, JRNY and my own name. I sell elliptical machines, treadmills, recumbent and upright exercise bikes, and more. I have been named one of the best places to work several times. Who am I?

Don’t remember last week’s question? Find it here.

Answer to last week’s quiz: Siemens AG