{"id":58858,"date":"2023-08-10T06:00:31","date_gmt":"2023-08-10T10:00:31","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58858"},"modified":"2023-08-21T14:40:30","modified_gmt":"2023-08-21T18:40:30","slug":"rokus-roku-prospects-post-cathie-woods-13-million-move-buy-or-wait","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/08\/rokus-roku-prospects-post-cathie-woods-13-million-move-buy-or-wait\/","title":{"rendered":"Roku\u2019s (ROKU) Prospects Post-Cathie Wood's $13 Million Move: Buy or Wait?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">TV streaming platform<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_ROKU\"> <span style=\"font-weight: 400;\">Roku, Inc. (ROKU)<\/span><\/a><span style=\"font-weight: 400;\"> has been going through a purple patch. According to Nielsen, while viewing hours on traditional TV in the U.S. declined by 13% year-over-year, ROKU\u2019s users streamed 25.1 billion hours in Q2, representing 3.8 Streaming Hours per Active Account per day, up 21% year-over-year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Consequently, for the fiscal second quarter that ended June 30, ROKU surpassed Street expectations by increasing its revenue by 10.8% year-over-year to $847.2 million and narrowing its loss by 7.3% year-over-year to $0.76 per share.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This outperformance triggered a rally of nearly 10%, which has resulted in the stock surging by more than 45% and 96% over the past six months and year-to-date, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Beyond the financial performance, on June 27, ROKU announced that it would become the<\/span><a href=\"https:\/\/newsroom.roku.com\/news\/2023\/06\/formula-e-expands-existing-partnership-with-cbs-sports-strikes\/kjevtnaj-1687867994\"> <span style=\"font-weight: 400;\">U.S. streaming home of Formula E<\/span><\/a><span style=\"font-weight: 400;\">, the electric vehicle-powered auto racing series, with live and on-demand replays of races. This has made it the company\u2019s first-ever live sports rights package at a time when streaming companies are rushing to secure sports broadcasting rights amid growing industry competition.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company launched Roku-branded TVs (the first TVs designed and made by Roku) in March to offer consumers even more choices and enable more innovation across the Roku TV program. Best Buy is the exclusive retailer for TV, and all 11 TV models have received strong industry reviews and customer ratings of 4.5 (out of 5) stars or higher.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">More recently, on August 3, Miss Universe signed a<\/span><a href=\"https:\/\/newsroom.roku.com\/news\/2023\/08\/miss-universe-signs-multi-year-broadcast-deals-with-the-roku\/wvduwiep-1691075629\"> <span style=\"font-weight: 400;\">multi-year broadcasting deal<\/span><\/a><span style=\"font-weight: 400;\"> with the channel, and on August 10, WildBrain landed<\/span><a href=\"https:\/\/newsroom.roku.com\/news\/2023\/08\/wildbrain-lands-multiple-kids-series-on-the-roku-channel\/ysg-affd-1691682895\"> <span style=\"font-weight: 400;\">multiple kids\u2019 series<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, in July, ROKU announced partnerships with FreeWheel and<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_SHOP\"> <span style=\"font-weight: 400;\">Shopify Inc. (SHOP)<\/span><\/a><span style=\"font-weight: 400;\"> to bring a suite of industry solutions to unlock the full value of streaming TV for advertisers and publishers and the ability to purchase products from SHOP merchants directly from their TV through Roku Action Ads for viewers, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Given the tailwinds, for the fiscal third quarter, ROKU expects total net revenue of roughly $815 million and a total gross profit of roughly $355 million. Moreover, Statista forecasts the number of U.S. households with cable TV packages to be down 40% from a decade earlier.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hence, it\u2019s unsurprising to find analysts expecting ROKU\u2019s revenue to increase by 7.6% year-over-year to $3.36 billion in 2023 and by another 15.3% to $3.88 billion in 2024.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, anticlimactically, Cathie Wood, the founder, CEO, and CIO of Ark Invest, an investment management firm whose flagship fund,<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=PACF_ARKK\"> <span style=\"font-weight: 400;\">ARK Innovation ETF (ARKK)<\/span><\/a><span style=\"font-weight: 400;\">,<\/span><a href=\"https:\/\/www.msn.com\/en-us\/money\/taxes\/cathie-wood-dumps-13-million-in-one-of-ark-s-largest-holdings\/ar-AA1eNOPb?ocid=msedgntp&amp;cvid=60a186999b6846bfa9f1f0d1b7afb852&amp;ei=36\"> <span style=\"font-weight: 400;\">sold shares of ROKU worth <\/span><span style=\"font-weight: 400;\">$13.1 million<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ARKK, which seeks to generate long-term capital appreciation by investing in businesses across the globe that seek to benefit from disruptive innovation, alone sold 138,221 shares of ROKU. Despite the sale, the AMC still owns 8,697,614 shares of the streaming company, valued at around $770 million, and the holding is weighted at 9.3% of ARKK's portfolio.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nevertheless, the $13 million move, albeit amounting to a little above 1% of ARK\u2019s stake in ROKU, has raised eyebrows. However, the move makes sense in the context of valuation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In terms of the forward EV\/Sales multiple, ROKU is trading at 3.11, which is 66.4% above the industry average of 1.87. Similarly, the stock\u2019s forward Price\/Sales and Price\/Book multiples of 3.43 and 4.93 are significantly higher than the respective industry averages of 1.22 and 1.99.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such a frothy valuation seems unsustainable for a company that\u2019s yet to turn in a profit and is operating in a competitive and overcrowded sector that has of late found the going tough due to an attention recession to the reopening of the economy after the pandemic, softened demand due to a year-long ordeal with inflation, muted TV advertising, and, of all things, strikes among Hollywood actors and writers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hence, while the stock is still trading above its 50-day and 200-day moving averages of $71.84 and $60.05, respectively, it is not difficult to see how the tide might have already begun turning. Moreover, with a 5-year beta of 1.76, volatility also remains an issue.<\/span><\/p>\n<p><b>Bottom Line<\/b><\/p>\n<p><span style=\"font-weight: 400;\">In view of the above, it could be wise for investors to hold their horses and wait for ROKU to become profitable or for its valuation to become more attractive before acquiring a stake in the streaming giant, aspiring to go full steam ahead.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>TV streaming platform Roku, Inc. (ROKU) has been going through a purple patch. According to Nielsen, while viewing hours on traditional TV in the U.S. declined by 13% year-over-year, ROKU\u2019s users streamed 25.1 billion hours in Q2, representing 3.8 Streaming Hours per Active Account per day, up 21% year-over-year. Consequently, for the fiscal second quarter [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":57446,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[9440,32369,32371,32372,32368,32252,32374,32370,32373],"class_list":["post-58858","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-ark-innovation-etf-arkk","tag-inc-roku","tag-multi-year-broadcasting-deal","tag-multiple-kids-series","tag-roku","tag-shopify-inc-shop","tag-sold-shares-of-roku-worth-13-1-million","tag-u-s-streaming-home-of-formula-e","tag-v"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Roku\u2019s (ROKU) Prospects Post-Cathie Wood&#039;s $13 Million Move: Buy or Wait? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"In this piece, we gauge the prospects of Roku, Inc. 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