What Makes the Upcoming Vizio IPO So Appealing? It’s Probably Not What You Think…

You’ve probably heard of Vizio before. It’s the company which, according to OMDIA, was the number two player in television market share in North America from January 2018 to December 2020.

In fact, over the past 15 years, Vizio has emerged as a top-selling TV company in the U.S. by securing deals with big box stores like Costco (COST) and Best Buy (BBY) and selling high-definition TVs at cut-rate prices. Currently, the company sells over 7 million TVs a year and generates close to $2 billion in revenue from those devices.

And on March 1, Vizio filed its paperwork to go public, and last week it set the terms for its IPO, which includes the price for its IPO to run between $21 and $23 per share. At this price, the company will be valued at nearly $4.2 billion.

But as encouraging as those sales numbers for an IPO, the real appeal of Vizio lies in the burgeoning world of streaming.

According to CNBC, Vizio is touting its streaming business as the major growth story for investors to get behind. The company introduced SmartCast in 2016, the technology which would run its popular TVs.

And since the launch, SmartCast has helped Vizio secure recurring revenues from deployed TVs, and its streaming business, known as Platform+, saw 133% growth in 2020, with help from increased demand during the heart of the pandemic. The streaming business generated 38% of the company’s total gross profit for 2020, while it contributed just 7.2% to the top line.

For Vizio, the streaming business has the potential to drive higher margins and right now, while contributions from streaming services might not be huge, plenty of growth is expected to come from this segment. We’re talking about a space that has seen names like The Trade Desk (TTD) and Magnite (MGNI) soar over the past 12 months, gaining as much as 450% and 1,136%, respectively, since March lows.

A definite IPO date hasn’t yet been determined, but the company will eventually trade under the ticker symbol, “VZIO.”

Originally published by MarketRealist.com

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