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Anna Williams

Roku

Question

Where do you see Roku stock price ending up in May? I've read somewhere that they are having difficulties with cancellations. 

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Hi Anna and thank you for your question. In general, you are right. Roku stock price plunged nearly 8% yesterday despite Roku’s first-quarter revenue numbers that topped the analysts’ estimate.

Roku said it added 2.9 million new active accounts, which represents a 37% increase compared to the same quarter last year. Another important metric that is closely scrutinized by analysts and investors - streaming hours - Roku reported a jump of 49% on an annualized basis. However, the fact that the advertisers slashed spending during the coronavirus pandemic hurt Roku’s financial performance, causing the stock price to drop nearly 8%. 

The stock price is strongly supported below $120, hence I’d be cautious with playing the Roku stock on the sell side. A more bullish scenario would see the stock price trade between $120 and $150 in the coming weeks as the latter is a strong resistance. 

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Hi Anna,

Shares of Roku (NASDAQ: ROKU) gained 8.2% recently as a result of a bullish analyst report.

Laura Martin, an analyst at the independent investment bank Needham & Company changed her rating for Roku’s stock to “Buy” and set a price target of $150. Martin noted that it is expected that the digital advertising sector should recover after suffering a big blow from coronavirus crisis. Martin highlighted the strong hours-viewed metrics in Q2 results of the digital media players manufacturer, weakened by the low ad spending in core categories like travel, autos, and entertainment.

Martin’s report particularly pointed out that advertisers will likely not spend the planned $7 billion in advertising in this year, enabling Roku and its peers to get a share of those delayed ad funds in the second half of 2020. 

Shares of Roku jumped an additional 13% on rumours that Google’s parent company, Alphabet (NASDAQ: GOOGL) wants to acquire the company. However, keep in mind that these are only rumours and currently there’s no information to confirm them.

“To be clear, there's no substance to this buyout speculation. Alphabet hasn't expressed interest in Roku, and Roku hasn't said it's for sale. There also aren't any news outlets claiming secret insider information. It's hard to know how such a rumour even got started today. But it's not the first time the two have been imagined as an ideal match.”

Roku is currently trading at 11 times trailing sales without cash flows to mention and is ranked as one of the top investment opportunities among some investors. Investing in Roku in short-term probably isn’t a good idea, however, on a long-term basis, there are a number of reasons to consider investing in this stock.
 

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Hi Anna, thanks for coming here.

Roku’s shares (NASDAQ: ROKU) climbed 8.6% on Monday.

The stock rose higher thanks to Daniel Kurnos, a benchmark analyst who increased his 12-month price target for Roku’s stock and reiterated his buy rating. 

Kurnos increased the price target for the entertainment company’s stock from $153 to $180, saying Roku will likely outperform in the advertising business and its earnings before interest, taxes, depreciation, and amortization if the economy recuperates from the current crisis.

The investors will get a clearer idea of Roku’s ad business’ performance once the company reports Q2 results, which are expected in early August.
 

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Hi Anna,

Reports showed that Roku (NASDAQ: ROKU) users streamed 14.6 billion hours of content in Q2 2020, enabling the streaming-media platform to report higher-than-expected revenue in spite of the falling television advertising market.

Shares of Roku were 0.4% in the red in after-hours trading Wednesday.

The video streaming company’s latest earnings reports show a net loss of $43.1 million, or 35 cents a share, against $9 million, or 8 cents a share, in the same period last year. Consensus estimates were anticipating a 52-cent loss per share.

Roku’s revenue for the quarter climbed to $356.1 million from $250 million, compared to analysts’ estimates of $316 million. Out of $356.1M,  $111.3 million came from its media player operations and $244.8 million from its streaming business, including advertising and licensing of its smart-TV operating system.

Roku reported an increase in the average revenue per user to $24.92 from $21.06 in the year-ago quarter.
 

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