Roku Share Price Forecast December 2021 – Time to Buy ROKU?
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Shares of streaming platform company Roku (NASDAQ: ROKU) are in the green today after closing at $216.60 as of December 7th (19:59 EST). The shares have fallen more than 50% from their highs. While investors are questioning the business, there is a lot of growth left. Since reaching its 52-week high in July, the shares have fallen 50% causing a lot of uncertainty. This has made it a bargain, which has made long-term investors interested.
Roku – Technical Analysis
According to Roku’s financial statement, the market cap of the company is at $29.103 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.
Moving averages such as Exponential Moving Average (10)( 221.54), Simple Moving Average (10)(220.19), Exponential Moving Average (20)(239.09), Simple Moving Average (20)(240.04) and Exponential Moving Average (30)(253.94) are indicating a sell action. Oscillators such as Relative Strength Index (14)(30.30), Stochastic %K (14, 3, 3)(17.95), Commodity Channel Index (20)(−71.78), Average Directional Index (14)(56.30) and Awesome Oscillator(−60.39) are neutral.
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Recent Developments
During the pandemic, Roku benefited from the pandemic which resulted in people watching more TV indoors. While it grew by a considerable margin, operating metrics accelerated during the height of COVID and are now slowing down in recent quarters. This has labelled Roku as a pandemic stop that has achieved all the growth that it possibly could.
In addition to this, Roku’s involvement in the streaming market has put it into competition with major technology giants. It is already in a dispute with Alphabet, the parent company of YouTube and YouTube TV over terms to support one another. As a result of a stalemate, Roku will pull YouTube from its platform on December 9th.
Roku is fighting a similar case with Amazon where Roku users might lose access to Prime Video if the two sides can’t work something out. Investors are thus questioning the company’s worth as big tech rivals play hardball with it.
There are three primary sources of Roku’s growth – the development of in-house content to make the platform more sticky with its users, expanding the presence of the Roku platform and an overall shift of advertising money into streaming platforms. As advertisers continue to spend more on connected TV (CTV), Roku has attracted a large share of that spend. While most of the company’s viewership is in the United States, it is also expanding overseas as Roku became the top streaming platform in Mexico. Its TV software is on 8 TV brands in Mexico.
Should You Buy ROKU Shares?
It’s not all negative news for investors interested in Roku, as one simply has to look at its financials. While user growth and engagement is slowing, each user-generated $40.10, a 49% year-over-year increase on top of the pandemic tailwinds in 2020 in the third quarter of 2021. This has pushed the business in a positive direction that is seeing free cash flow and profits snowball.
Roku’s prospects are looking up for the foreseeable future. It has pushed to create original content and has bought failed streaming platform Quibi earlier this year. Roku is steadily working to break its dependence on its partners and is planning to produce more than 50 original shows over the next two years. While the company is facing questions from investors now, competitive pressures have been around since the company’s inception and signs are that it is well-equipped to handle the pressure.
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