[reactspa]

I was astonished that Roku has half a billion in cash.

Then I learned this was only 26% of its cash reserves.

I thought cash was considered wasteful because it loses value via inflation.

Has the thinking changed? Can someone knowledgeable please help me understand this?

[kypro]

You need some amount of cash for payroll, POs, etc.

The rest is then generally held in "cash equivalents" such as short-dated government bonds. The latter has yield to offset inflation. But basically "cash" is being used quite loosely here.

From the 8-K:

> The Company has total cash and cash equivalents of approximately $1.9 billion as of March 10, 2023. Approximately $487 million is held at SVB, which represents approximately 26% of the Company’s cash and cash equivalents balance as of March 10, 2023.

[TacticalCoder]

> The rest is then generally held in "cash equivalents" such as short-dated government bonds.

Wouldn't these bonds belong to Roku but simply be bought/sold/held, for a fee, by SVB?

I mean: my bank in Europe can go belly up, my stocks are my stocks and they'll be transferred to my new bank. They cannot be used as part of a bank "bail in" procedure (well at least I think and I hope that's the case).

[kypro]

I'm not an expert in this area, but my understanding is that it doesn't really matter if it's cash, bonds or stocks – the bank is just a custodian of your assets and you always have the primary claim to those assets.

That said, the bank can still lend out your assets within certain regulatory guidelines, but in theory the regulation is in place so that they always have enough liquidity should you choose to withdraw it. Issues only really come into play when large numbers of consumers try to withdraw in rapid succession and a bank doesn't have adequate liquidity available. Ie, a "bank run".

Your point on stocks is interesting though because it's quite possible your bank actually does loan out your stocks to short sellers and makes some yields some profit in doing so. My understanding is that there are scenarios where you can actually loose your stocks in the event your broker goes bankrupt, although in such a case your government should insure you up to a certain amount (like with cash deposits).

But in a worst case scenario you can lose your stocks and banks can definitely lend the assets you hold with them.

[numbsafari]

You need cash to pay for things, like payroll and rent.

[londons_explore]

But you typically run off firm promises of cash from investors. Then you only need a couple of weeks cash in the bank, and the investors promise to make cash available on demand as you need it.

[JumpCrisscross]

> you typically run off firm promises of cash from investors

This is a leveraged operating model. It’s risky and tanked many firms when the CP markets froze in ‘08.

[egl2021]

In my experience with small SV companies over the last several decades, this would be exceptional. Typically you get money from investors at negotiated, spaced points in time. In between your CFO manages the cash on hand to cover everything: payroll, taxes, and any other accounts payable.

[rr808]

It was higher than I expected, but kinda makes sense. You're right that cash does lose value via inflation, but you need cash for when you need it. Looks like they sold a billion worth of stock in 2021 when times were good. I'd think they could invest in some bonds but long dated bonds dropped 20% in value last year so good job they didn't. https://finance.yahoo.com/quote/ROKU/balance-sheet?p=ROKU

[kevin_thibedeau]

They're ramping up for their own branded TV line. Might be a temporary injection for that.