As the content wars heat up, Roku’s stock price is a roller coaster of stre-motions

As competition increases, the consensus on Roku’s stock viability grows even more scattered.


September 23, 2019

On Friday, Netflix stock tumbled 7% after CEO Reed Hastings acknowledged the onslaught of incoming streaming competition from companies such as Disney and Apple.

But World-War-Stream is also carpet-bombing hardware providers like Roku, a market leader that provides consumers the privilege to Netflix-and-chill. Roku saw its stock price tumble 25.9% last week, prompting some analysts to pull the “overvalued” card.

But, as Roku continues to experience success with global expansion, some traders aren’t so sure — and it’s creating one of the most volatile stocks in tech.

Da bulls…

At the start of Q1, Roku said it planned to bring in $1B in revenue for 2019 despite the increase in streaming competition. Its plan: Focus on global expansion of its streaming device, and its Roku-branded smart TV (half of Roku customers still watch traditional television).

And it’s working: Roku’s shares have tripled since then — giving the company a market value of around $13B — and it recently inked a deal with Chinese electronics manufacturer Hisense to sell Roku-powered TVs in the UK. 

According to MarketWatch, Oppenheimer remains “upbeat” on Roku’s global expansion plans and believes the company has a head start on its competition.

Da bears…

As of last Friday, Roku’s stock had dropped more than 10% on 3 different occasions in the past 9 trading days from new competition.

This includes a 14% dip after Comcast offered up a free Xfinity Flex streaming box to internet-only subscribers, and a 10.5% tumble when Apple announced a free year of its new subscription channel Apple TV+ for Apple-heads looking to upgrade their Mac, iPhone, or Apple TV device.

On Friday, Pivotal Research sent a note to clients titled, “Is Roku Broku?” — giving a sell rating and stock price target 45% below its current value.

So is Roku actually ‘Broku’?

Not if you count the better part of 2019. It’s worth noting that Roku’s stock is still up over 250% this year, leaving Chipotle (the boss performer of the S&P 500) in the dust by nearly 160 percentage points.

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