Why Roku Acquisition Could Make Sense for Disney or Walmart

A few years ago, when Roku was still a private company with uncertain prospects, it would occasionally get acquisition offers from bigger companies. CEO Anthony Wood was never interested. Even when the streaming device maker was worth around $1 billion, he argued that one day he expected it to be worth 10 times that much, according to a person familiar with his thinking. Today, with Roku’s market capitalization now above $7 billion, Mr. Wood is looking smart.

Since going public in September 2017, Roku stock has more than tripled to nearly $65 a share. It’s a much better performance than other, more heralded tech startups to go public that year, such as Snap and Blue Apron (both trading well below their IPO price). For Roku shareholders today, though, the question is how much higher can the stock go—or whether now is the time for Mr. Wood to take the money and run by selling. Possible buyers could be Disney, AT&T or Walmart. But it’s tough to see any of these companies being willing to pay more than what Roku is currently trading at.