Roku Inc. Share Forecast November 2021 – Time To Buy Roku?
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Shares of the pioneering American publicly trading company Roku Inc. (NASDAQ: ROKU) are in the red today, after closing at $278.62 on 5th November (11:20 PM GMT-8). The shares of Roku Inc. fell as much as 11% last week in extended trading as the third-quarter reports failed to meet key metrics expectations. The company’s CFO Steven Louden blames the global pandemic for its slumped shares which have been consecutively disrupting the global supply chains. But will the company be able to recover and secure its profitable position as seen last year? Or will it continue to drop in the share market? Let’s find out.
Roku – Technical Analysis
According to the financial statement of last year, the market cap of the video-streaming platform company is at $37.545B with total assets worth $3.912B. Whereas, the total revenue for 2020 was $1.78B and $1.13B for the year prior to that.
Moving Averages for ROKU such as Exponential Moving Average (10) (306.75), Simple Moving Average (10) (310.20), Exponential Moving Average (20) (314.52) and Simple Moving Average (20) (320.39) are pointing towards selling. Oscillators such as Relative Strength Index (14) (30.96), Stochastic %K (14, 3, 3) (10.53), Commodity Channel Index (20) (-254.06) and Average Directional Index (14) (22.11) are neutral.
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Recent Developments
The Roku Inc. declining shares have been primarily linked with a staggering supply chain and sluggish consumer demand as the “Work From Home” situation is gradually lifting up. However, the recent dip has been significantly pushed due to the volatility prior to the Q3 2021 results announcement and the constant supply chain challenges.
Even though the company showed impressive performance during the onset of the pandemic last year, the reopening of economies this year and their eagerness to get back on track puts a pressure on Roku Inc. to increase its advertising revenue in the upcoming quarters. Adding to the list of increased costs is the shipping constraints and strained component supply conditions.
In its shareholder letter, the company CFO stated that the issues of supply chain will continue for the coming year of 2022 as well which will ultimately influence the advertising, product pricing and availability. Furthermore, Roku Inc. also has to deal with the negative margins in the Players division as it has fallen 26% whereas the costs went up due to supply chain challenges.
Should You Buy Roku Shares?
The world’s transition toward streaming has expedited Roku to emerge as a promising platform over the years. While the Q3 2021 reports showed a decline in its shares, the company’s impressive user base has made a prominent hold in the ad-tech business which also constituted more than 80% of its total revenue during the second quarter.
Last year’s third-quarter reports stated that almost 49% of global programmatic ads were on Roku’s devices and it has been estimated that the spending will only go up in 2022 by $8.2 billion approx. Adding to this is Roku’s steady user growth rate which will only bring more value to the number of ads that will be seen.
This has a great potential to attract advertisers that ultimately poses as a major source of revenue. Nevertheless, all of the trends are based on Roku’s past performance and the current Q3 FY 2021 results puts the company in a gloomy spot. Therefore, it is preferable to keep a close watch on the share price at the moment which may see drastic changes in the future.
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