Despite its growth and increased sales, Vizio wants its investors to focus on its television ads business as its IPO is getting closer.
Vizio Inc has scheduled its initial public offering (IPO) to hold this week on the New York Stock Exchange (NYSE), and the company wants investors to focus on its ads business. Vizio is finally going public after its initial attempt in 2015. At the time, Vizio stopped the IPO plans after agreeing to sell the company for $2 million to China’s LeEco. However, Vizio eventually terminated the deal due to regulatory complexities.
Vizio IPO
As Vizio plans its upcoming IPO, the company hopes to sell each share at $21 to $23. The IPO could push the company’s valuation to $4.2 billion if shares are sold at $23 each.
Vizio has grown over the years to become a top-selling TV company in the US. The TV company emerged as one of the US’s fast-selling TV companies after securing deals with big box store company Costco Wholesale Corporation (NASDAQ: COST). The deal also extended to consumer electronics company Best Buy (NYSE: BBY) about 15 years ago. The company’s growth also came from selling HD TVs to customers at cut-rate prices.
Now, Vizio sells more than 7 million Televisions every year. The company then generates about $2 billion in revenue from the devices.
Vizio Ads Business
Despite its growth and increased sales, Vizio wants its investors to focus on its television ads business as its IPO is getting closer. During Vizio’s online roadshow to promote the upcoming IPO, the company’s chief financial officer Adam Townsend said:
“One of the primary addressable markets that we’re focused on for our future growth is, of course, television advertising. The shift in viewers from linear to ad-supported streaming is significant and we know the ad dollars will follow viewers more and more.”
Vizio’s aim is to let consumers buy its TVs even if it is at a small profit margin. This is to let the company generate revenue through its operating system, SmartCast. Last year, SmartCast accounts increased by 61% to 12.2 million. SmartCast allows users to access some major streaming services and offers several free and paid channels. When people sign up on their SmartCast TVs, Vizio generates revenue from adverts on its home screen and also from within some free content.
Vizio introduced SmartCast in 2016. In a video for potential investors, Vizio founder Willam Wang said:
“Many brands are out there fighting for the limited space at retail. To stay competitive, we knew we needed to find a way to gain recurring revenue from the deployed TVs, which would enable us to keep the costs of TVs low for our retailers and consumers.”
As CNBC noted in a report, Vizio’s competition is now with streaming providers Roku Inc (NASDAQ: ROKU), Amazon.com Inc (NASDAQ: AMZN), and Google LLC (NASDAQ: GOOGL). Subscription services like Netflix Inc (NASDAQ: NFLX), Amazon Prime Video, and Disney Plus are enjoying nearly all the growth recorded in the TV industry.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
