Roku (NASDAQ:ROKU) Stock Price Falls 0.7% - Analysis of Recent Developments

Roku, Inc. (NASDAQ:ROKU - Get Free Report) experienced a decline of 0.7% in its stock price during trading on Wednesday. The shares dropped to as low as $73.46 before closing at $74.34. A total of 1,683,982 shares were exchanged during the session, representing a significant 61% decrease from the average trading volume of 4,310,560 shares. The previous closing price was $74.89.

Analysts Adjust Price Predictions

Recently, several analysts have provided updates on Roku's stock. For instance, Loop Capital raised its target price for Roku shares from $70.00 to $80.00 and assigned a "hold" rating. This revision occurred on Monday, December 9th. Similarly, Moffett Nathanson elevated Roku’s rating from "sell" to "neutral," with a price target of $80.00 on October 1st. Moreover, JPMorgan Chase & Co. increased its target for Roku from $90.00 to $92.00, maintaining an "overweight" rating as of October 10th. Rosenblatt Securities also raised its target from $61.00 to $86.00, offering a "neutral" outlook on October 31st. Lastly, Citigroup adjusted its forecast from $60.00 to $77.00 with a "neutral" rating on September 25th. Overall, the stock has garnered mixed reviews: two analysts recommend selling, nine suggest holding, twelve advocate buying, and one strongly supports buying. According to MarketBeat.com, Roku holds a consensus rating of "Moderate Buy" with an average target price of $83.81.

Current Trading Situation

Roku's recent trading signals some caution among investors. The company has a market cap of $10.79 billion and a price-to-earnings ratio of -61.95. Its beta value of 2.06 indicates a high level of volatility in comparison to the broader market. The current moving averages for Roku stock stand at $75.32 for the 50-day and $68.88 for the 200-day periods.

Financial Performance Insights

The latest financial results from Roku were released on October 30th, reporting earnings of ($0.06) per share for the quarter. This was above the analysts' estimate of ($0.35) by $0.29. The company's reported revenue was $1.06 billion, surpassing the anticipated $1.02 billion. Despite this positive performance, Roku is operating with a negative net margin of 4.42% and a negative return on equity of 7.22%. Revenue grew by 16.5% compared to the same quarter last year, indicating that the company is on a recovery path. Analysts forecast a negative earnings per share of -1.1 for the current fiscal year.

Recent Insider Activities

In recent developments, Roku's Chief Financial Officer, Dan Jedda, sold 1,000 shares on December 16th at an average price of $82.73, accumulating a total of $82,730.00 from this transaction. Following this sale, he owns approximately 64,555 shares valued at around $5,340,635.15, which marks a 1.53% reduction in his holdings. Meanwhile, CEO Anthony J. Wood sold 25,000 shares on December 10th at an average price of $82.64, resulting in total proceeds of $2,066,000.00. Post-sale, he possesses around 26,538 shares worth approximately $2,193,100.32, reflecting a significant 48.51% decrease in his ownership. In total, company insiders divested 72,885 shares valued at $5,645,259 in the last quarter, with insiders owning about 13.98% of Roku's shares.

Hedge Fund Activity

Institutional investors have been active in modifying their positions in Roku. FMR LLC has increased its holdings by 1.7% during the third quarter, owning 14,570,372 shares valued at $1,087,824,000 post-acquisition of 244,793 additional shares. Holocene Advisors LP took a new position in Roku worth $129,015,000 in the same period. Additionally, Westfield Capital Management Co. LP raised its position by an impressive 126.1%, owning 1,535,576 shares valued at $114,646,000 after acquiring 856,401 shares. Meanwhile, Charles Schwab Investment Management Inc. grew its holdings by 3.2%, with currently 955,969 shares valued at $71,373,000. Furthermore, Point72 Asset Management L.P. raised its position in Roku by a staggering 352.5% during the third quarter, now owning 651,658 shares worth $48,653,000. This indicates significant interest in Roku, as approximately 86.30% of the stock is owned by institutional and hedge fund investors.

About Roku, Inc.

Roku, Inc. operates a streaming TV platform both in the United States and internationally, catering to a variety of audiences. Its business is divided into two primary segments: Platform and Devices. The streaming platform facilitates users in accessing diverse content, including TV shows, movies, news, and sports. Roku’s platform also offers digital advertising services, providing facilities for both direct and programmatic video ads, along with media promotions and streaming service distributions.

Conclusion

Investors considering whether to sell Roku shares amidst the recent drop should weigh the company’s mixed analyst outlook, changing insider ownership dynamics, and evolving institutional interest as critical factors in their decision-making process.

Roku, Stocks, Investors