What's With Roku's Stock Price Lately?
I added Roku to the LLGP in early December, and it has been a wild ride over the past month.
While analysts have come out overly bearish in 2018, the stock is poised for further growth as the company scales.
I find the clearest mistake out of recent commentary in comparing Roku to Netflix.
Roku Position Update
I purchased Roku (ROKU) on December 5th of last year at $41.39 per share. The decision to take an initial position was based upon a discounted free cash flow analysis where under the EBITDA method the stock was fairly valued at $43 per share. However, there was a disconnect as the perpetuity method yielded fair value closer to $33 per share.
Despite the variance, I executed a small position to start with; in the event Roku displays weakness approaching the $35 or lower level, and I will average the position. This brings me to tonight's update topics.
Roku appears to be misunderstood as many analysts and investors have different perspectives on the company's future. In a bull market that is gaining momentum, it is getting easier to champion companies with lofty valuations and questionable possibilities for success.
As multiple large investment firms have downgraded Roku, the stock has dropped from $56 to below $44 per share. I am not concerned regarding this drop, nor do I feel that it is completely unjustified. The statement that has gotten under my skin though was the comment regarding Roku's valuation being lofty and the company not being as profitable as larger peers like Netflix (NFLX).
I find this comment to be foolish as there are varying levels of profitability. While Netflix has been a success story, and it is the leading streaming platform today, the company has an unproven streaming business model. It is unproven by the fact that over the past trailing twelve-month period as of the September 2017 quarter, Netflix generated -$1.9 billion in operating cash flow.
sourse : https://seekingalpha.com/article/4137103-rokus-stock-price-lately
While analysts have come out overly bearish in 2018, the stock is poised for further growth as the company scales.
I find the clearest mistake out of recent commentary in comparing Roku to Netflix.
Roku Position Update
I purchased Roku (ROKU) on December 5th of last year at $41.39 per share. The decision to take an initial position was based upon a discounted free cash flow analysis where under the EBITDA method the stock was fairly valued at $43 per share. However, there was a disconnect as the perpetuity method yielded fair value closer to $33 per share.
Despite the variance, I executed a small position to start with; in the event Roku displays weakness approaching the $35 or lower level, and I will average the position. This brings me to tonight's update topics.
Roku appears to be misunderstood as many analysts and investors have different perspectives on the company's future. In a bull market that is gaining momentum, it is getting easier to champion companies with lofty valuations and questionable possibilities for success.
As multiple large investment firms have downgraded Roku, the stock has dropped from $56 to below $44 per share. I am not concerned regarding this drop, nor do I feel that it is completely unjustified. The statement that has gotten under my skin though was the comment regarding Roku's valuation being lofty and the company not being as profitable as larger peers like Netflix (NFLX).
I find this comment to be foolish as there are varying levels of profitability. While Netflix has been a success story, and it is the leading streaming platform today, the company has an unproven streaming business model. It is unproven by the fact that over the past trailing twelve-month period as of the September 2017 quarter, Netflix generated -$1.9 billion in operating cash flow.
sourse : https://seekingalpha.com/article/4137103-rokus-stock-price-lately
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