Roku Share price Forecast September 2021 – Time to Buy ROKU Stock?
Shares of American digital media company Roku (NASDAQ: ROKU) are in the green today, closing at $323.09 as of September 16th, (19:59 UTC-4). ROKU shares have been hitting some bumps, most notably decreasing by 35% from their all-time high in 2020. The share decline was due to a variety of different factors including increased competition from the likes of Alphabet and Amazon. While user growth is slowing, the international growth story for the shares is still at its early stages. The dramatic decline of the share prices has given long-term investors an opportunity to buy ROKU shares.
Roku – Technical Analysis
According to Roku’s financial statement, the market cap of the company is at $43.117 billion with total assets worth $3.639 billion. Revenue for 2020 was at $1.78 billion with a profit margin of -0.98% compared to $1.13 billion.
Moving averages for Roku such as Exponential Moving Average (10)(330.92), Simple Moving Average (10)(331.62), Exponential Moving Average (20)(343.49) and Simple Moving Average (20)(343.23) are indicating a sell action. Oscillators such as Average Directional Index (14) (28.88), Awesome Oscillator(−40.4), Relative Strength Index (14)(34.29), and Stochastic %K (14, 3, 3)(11.06) are all neutral.
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In July 2021, Roku shares were trading at an all-time high before several events instigated a sell-off. Total hours customers spent on the platform started to decline sequentially from the previous quarter following the release of the company’s 2nd quarter earnings on August 4th. It dropped 5% to 17.4 hours billion from 18.3 billion hours. Active accounts grew by 55.1 million, representing a 28% year-over-year increase. However, this was the lowest level since its public listing back in 2017.
The management of the company has cited consumers enjoying non-television entertainment more as lockdown restrictions have been lifted, as a major reason for the decline. Tough compatibles from 2020, which is a common factor amongst many so-called “COVID stocks” have been put forward as another reason.
There has also been recent media chatter about Roku facing competitive pressure from the likes of giants such as Amazon and Alphabet. While Alphabet announced a partnership with television manufacturer TCL, Amazon is also intending to sell Amazon-branded smart TVs with built-in Alexa systems. Both these moves will be seen as major encroachment into Roku’s market. The company has made great strides in expanding internationally beyond the U.S., selling streaming devices in the UK., France, Ireland, and Germany. It has also sold devices across 12 Latin American countries.
Should You Buy ROKU Shares?
Bearish sentiment has now amplified around discussions regarding ROKU. However, competitive threats have been a nagging narrative for years now, and ROKU has grown in spite of that. It has become a stronger player in the ad market thanks to its industry-leading user-base which accounts for 80% of the company’s total revenue in the second quarter. Its operating results were reflective of its success as its platform segment revenue increased 117% year over year, reaching $532.3 million.
With the company boasting a market cap in excess of $40 billion, it is expected to generate $2.8 billion in 2021 which will result in a forward price-to-sales of 15. Roku has been fighting off some of the biggest companies in the world, now accounting for 49% of programmatic ads for streaming television. Considering all of this, we give the company the benefit of the doubt. The latest sell-off for ROKU is indeed a buying opportunity that investors should consider.
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