The Roku Hiccups: In a little more than 24 hours, Roku saw just how fickle investors can be about their investments, even when the investment in question helps people better experience one of the most-important aspects of everyday life: Watching TV.
You see, on Monday, Roku’s shares skyrocketed more than 28 percent, to close at $42.71. The impetus for the big gains was Roku saying it had reached a licensing deal with Funai Electric, of Japan, that will put Roku’s video streaming technology inside Philips televisions that Funai manufactures for North America. The deal will begin in time for the crucial Christmas and holiday shopping season. Roku also said it will cut $20 off the price of its $69.99 streaming stick over the Black Friday weekend.
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And then the bottom fell out.
But by the time trading finished Tuesday, Roku shares had fallen 13.4 percent, to close at $36.98. That’s what can happen when a Wall Street analyst thinks your stock price is higher than it should be. And especially after that stock price has more than tripled in less than two months since the company went public. Which is what happened to Roku since it priced its IPO at $14 a share and began trading Sept. 27.
Analyst Jason Helfstein, of Oppenheimer, cut his rating on Roku to underperform from perform — or, in layman’s terms, Helfstein cut his rating down to sell from neutral– and set a price target of $28 a share on the stock.
Helfstein said he likes what Roku is doing, calling it “the leading independent OTT (over the top) streaming platform though a device and software strategy. ” But, Helfstein thinks the run-up in Roku’s share price has just been too much, too soon. Helfstein said that based on the sales and gross profits from Roku’s technology platform, it is now “the most-expensive publicly traded internet company.”
Give Roku a few more days like Tuesday and it may not be so expensive after all.
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Source:: The Mercury News – Latest News