What Happened?
Shares of streaming TV platform Roku (NASDAQ: ROKU) jumped 4.6% in the afternoon session after news emerged of a significant new institutional investment and positive analyst commentary. The move was supported by a report that Universal Beteiligungs und Servicegesellschaft mbH acquired over 85,000 shares, establishing a new position in the company. This institutional confidence was mirrored on Wall Street, where Bank of America raised its price target on the stock to $110.00 and maintained its "buy" rating. Adding to the bullish sentiment, Wall Street Zen also upgraded Roku from a "hold" to a "buy" recommendation. The positive momentum also followed a recent article that highlighted the company's strong sales growth and what it described as an undervalued stock price compared to its peers.
After the initial pop the shares cooled down to $94.37, up 4.7% from previous close.
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What Is The Market Telling Us
Roku’s shares are extremely volatile and have had 33 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 22.5% on the news that the company reported third-quarter earnings results. Its EBITDA forecast for the next quarter missed, and management's commentary around Platform revenue created uncertainty and some bearishness. Prior to the call, there was a thought that Platform revenue growth should accelerate through 2025, but management seemed to temper this, which weighed on shares. On the other hand, revenue and EBITDA came in ahead during the quarter. Overall, this quarter was mixed with guidance and Platform revenue uncertainty hurting the stock.
Roku is up 26.7% since the beginning of the year, and at $94.37 per share, it is trading close to its 52-week high of $99.07 from February 2025. Investors who bought $1,000 worth of Roku’s shares 5 years ago would now be looking at an investment worth $634.42.
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