Roku Share Forecast January 2022 – Time to Buy ROKU?
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Shares of video streaming company Roku (NASDAQ: ROKU) are in the red today, after closing at $193.83 as of January 6th (19:59 EST). Roku was the No. 1 smart TV operating system in the United States for the last 2 years and is looking to copy that success in international markets. The company recently announced new manufacturing partnerships in Mexico and the United States.
Roku – Technical Analysis
Roku’s financial statement indicates a market cap of $26.43 billion with total assets worth $3.912 billion. Revenue for 2020 was at $1.78 billion with a profit margin of -0.98% compared to $1.13 billion in 2019.
Oscillators for Roku such as Relative Strength Index (14)(35.51) and Stochastic %K (14, 3, 3)(24.27) are neutral. Moving averages such as Exponential Moving Average (10)(217.51), Simple Moving Average (10)(222.85), Exponential Moving Average (20)(223.88), Simple Moving Average (20)(224.11), Exponential Moving Average (30)(230.73) are indicating a sell action.
Recent Developments
There are two major sources for Roku’s revenue: platform revenue and sales of its physical players connected to TVs. The physical players allow any non-Roku branded TV to have the benefits of a Roku TV, which includes free access to the Roku channel. To attract households to this platform, Roku is willing to sell its players at a small profit or even a slight loss. Roku was selling its players at healthy profit margin at the initial stages of the pandemic when demand for in-home entertainment was so high.
Roku experienced a stretch of five consecutive quarters of positive gross profit on sales of players. But the last two consecutive quarters, the players have been sold at a loss. Both customer demand decreasing and supply chain disruptions have raised input prices. Management has absorbed the higher costs instead of passing them along to consumers. Roku generated $582.5 million in revenue from the platform segment which is an increase of 82% from the same quarter last year. Gross profit was $378.5 million.
Roku has incurred a gross profit loss of $14.6 million on $97.4 million in sales from its player segment. It had 56.4 million active accounts, up from 46 million at the same time last year at the end of Q3. It has recently launched in Germany and brazil, with future plans to introduce Roku TV models in Peru and Chile.
Should You Buy ROKU Shares?
Investors interested in Roku should look at Roku’s international markets. While it dominates in North America, Roku is still well behind when it comes to other continents. Due to the connected TV- market being more mature Roku’s 39% share of TV streaming time in the region translates into a 31% share globally. The company still has an opportunity to take market share from global TV leaders like Samsung and LG as streaming grows more popular in other markets.
There are two important reasons why the company is still a lucrative investment. Roku is moving away from traditional cable TV to streaming. The company’s push into countries like Brazil, Germany and the United Kingdom. The top 10 cable-TV advertisers doubled their spending on Roku’s platform in Q3. The company is also scheduled to develop 50 new original series over the next couple of years.
There are also a couple of risks for the stock. It could have another spat with a content company, such as its most recent face-off with Alphabet’s YouTube. It could also face a slowdown as the pandemic fades away. For long-term investors, it remains a good company to invest in, especially right now.
Buy ROKU Stock at eToro from just $50 Now!
