Roku Share Price Forecast February 2022 – Time to Buy ROKU?
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Shares of American publicly traded company Roku (NASDAQ: ROKU) are in the red today, after closing at $112.46 as of February 18th (19:59 EST). Roku shares have been down 21% following the release of its fourth-quarter earnings. The shares have decreased 68% in the last 6 months. This was as a result of the business received at the pandemic’s onset while millions of folks were stuck at home and streaming content became a more popular pastime. Now, the coronavirus pandemic goes from a tailwind to a headwind for Roku. Demand from customers remains high while supply-chain shortages are creating an imbalance.
Roku – Technical Analysis
Roku’s financial statement indicates a market cap of $15.11 billion with total assets worth $4.082 billion. Revenue for 2021 was at $2.76 billion with a profit margin of 8.77% compared to $1.78 billion in 2020. Roku has suffered a gross profit loss in three consecutive quarters from selling its player units due to rising costs. The company suffered losses of $6.7 million in the second quarter of 2021 and $14.6 million in the third quarter, bringing the total to $45.9 million in the fourth quarter.
Moving averages such as Exponential Moving Average (10)(150.21), Simple Moving Average (10)(155.20), Exponential Moving Average (20)(158.01), Simple Moving Average (20)(154.97) and Exponential Moving Average (30)(166.38) are indicating a sell action. Oscillators such as Relative Strength Index (14)(27.32), Stochastic %K (14, 3, 3)(24.01), Commodity Channel Index (20)(−339.82), Average Directional Index (14)(24.06) and Awesome Oscillator(−17.68) are neutral.
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Recent Developments
As people got vaccinated against COVID-19 and economies started reopening, it was to be expected that folks would spend less time streaming content. It stands to reason that the pandemic surge at its onset was always going to be temporary, whether it lasted one month, one year, or three years. Now that the boom is reversing, it’s no detriment to Roku or its management. Slowing customer demand is not a short-term phenomenon only.
Roku’s ability to serve existing customers who are interested in buying players and TVs are also being affected by supply-chain shortages. As its management prioritised growth, Roku did not raise prices for its players and instead absorbed the losses. This has assisted Roku in adding nearly nine million active accounts in the last year. On the other hand, the company’s to $21.4 million in Q4 2021 from $65.2 million in the same quarter of 2020.
While Roku faces some troubles in the near term, it’s hard to ignore its excellent long-term prospects. There is a worldwide trend of consumers moving to stream content instead of watching over linear TV. This has resulted in every significant studio creating a flagship streaming service. Roku also became the No. 1 TV streaming platform in the U.S., Canada, and Mexico in 2021. Roku’s main revenue generation happens from showing advertisements, an industry that generated over $750 billion in sales last year. It has also struck revenue-sharing agreements with streaming services.
Should You Buy ROKU Shares?
After the crash, Roku shares are selling at a price-to-sales ratio of 6.1. This is near their lowest level since 2018. However, the company has taken steps to implement considerable improvements. This is evident from the fact that Roku had just 27.1 million active accounts at the end of Q4 2018 and boasted 60.1 million active accounts as of December 31st.
Roku is also generating more revenue per user and its average per user was $41.03 as of December 31st compared to $17.95 at the end of 2018. While the near term may appear volatile, ROKU shares are best for long-term investors.
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