Should Roku Be in Your Portfolio?
StockNews
Published Apr 13, 2021 09:50AM ET
Updated Apr 13, 2021 10:01AM ET
Should Roku Be in Your Portfolio?
Roku (NASDAQ:ROKU) has been capitalizing on the trend in which consumers are embracing TV streaming platforms at the expense of traditional linear TV. The company has made numerous strategic acquisitions over the past few months as part of its expansion efforts. However, is its pricey valuation justified by its near-term prospects? Let’s find out.Roku, Inc. (ROKU) pioneered content streaming for TV and has grown significantly over the past few years, operating through its two segments—Platform and Player. Its revenue has increased at a CAGR of 51.4% over the past three years.
Since the onset of the COVID-19 pandemic, an increasing number of people have been shifting away from traditional linear TV toward a wide range of streaming ecosystems, thus helping ROKU grow in terms of number of active accounts.
Its healthy performance is also reflected in the stock’s 67.4% returns over the past six months. It closed yesterday’s trading session at $371.12. The company has also expanded its international reach and its TV became the top-selling smart TV OS in Canada. However, ROKU is still in its early stages of building an international streaming video platform and we think it is overvalued at its current price level.
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