Roku (NASDAQ:ROKU) Stock Price Up 3.1% After Earnings Beat

Roku, Inc. (NASDAQ:ROKU)’s stock price was up 3.1% on Tuesday following a stronger than expected earnings report. The stock traded as high as $161.26 and last traded at $160.36. Approximately 3,848,530 shares traded hands during mid-day trading, an increase of 18% from the average daily volume of 3,273,656 shares. The stock had previously closed at $155.52.

The company reported $1.20 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.55 by $0.65. The company had revenue of $1.50 billion during the quarter, compared to the consensus estimate of $1.41 billion. Roku had a net margin of 6.82% and a return on equity of 13.73%. Roku’s revenue for the quarter was up 24.1% on a year-over-year basis. During the same quarter in the prior year, the firm posted $0.16 earnings per share.

Key Headlines Impacting Roku

Here are the key news stories impacting Roku this week:

• Positive Sentiment: Q3 results beat expectations: Roku reported $1.20 per share versus the $0.55 consensus, while revenue rose 24% year over year to $1.5 billion, topping estimates. Net income reached $183 million. Article: Roku Sees Soaring Sales, Net Income of $183M, As It Blasts Past Analyst Expectations
• Positive Sentiment: Advertising performance improved: Advertising revenue grew 23%, and the business retained more revenue as gross profit. Lower marketing spending also helped lift earnings, although Roku expects higher costs in the fourth quarter. Article: Roku’s Ads Drive a 7-Fold Jump in Profit
• Positive Sentiment: Unusually high call-option volume may reflect bullish investor positioning: traders bought 12,705 calls, 179% above the average volume of 4,546. Options activity is not a guarantee of future performance.
• Neutral Sentiment: Fox acquisition remains in progress: Fox has received all foreign regulatory approvals for its pending $22 billion acquisition of Roku, narrowing the deal spread. The transaction is still subject to the remaining closing process. Article: Roku/Fox deal spread narrows after Fox says it received all foreign regulator approvals
• Negative Sentiment: Rosenblatt Securities downgraded Roku from “buy” to “neutral” and set a $160 price target, which is close to the recent share price and could limit perceived upside. Article: Roku downgraded by Rosenblatt Securities

Analysts Set New Price Targets

Several equities research analysts have recently weighed in on the stock. Wells Fargo & Company downgraded shares of Roku from an “overweight” rating to an “equal weight” rating and decreased their target price for the stock from $167.00 to $165.00 in a research note on Friday, August 14th. Rosenblatt Securities lowered shares of Roku from a “buy” rating to a “neutral” rating and set a $160.00 target price on the stock. in a research report on Tuesday. Fox Advisors set a $157.00 price target on Roku in a report on Friday, July 17th. BMO Capital Markets raised Roku from a “market perform” rating to an “outperform” rating in a research note on Tuesday. Finally, Seaport Research Partners downgraded Roku from a “buy” rating to a “neutral” rating in a research note on Friday, August 7th. One analyst has rated the stock with a Strong Buy rating, seven have assigned a Buy rating and nineteen have issued a Hold rating to the company’s stock. Based on data from MarketBeat, Roku currently has an average rating of “Hold” and a consensus target price of $156.17.

Insider Buying and Selling at Roku

In other news, SVP Christopher Handman sold 2,999 shares of the firm’s stock in a transaction that occurred on Wednesday, September 2nd. The shares were sold at an average price of $155.64, for a total transaction of $466,764.36. Following the completion of the transaction, the senior vice president directly owned 8,997 shares of the company’s stock, valued at $1,400,293.08. This trade represents a 25.00% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Gilbert Fuchsberg sold 10,719 shares of Roku stock in a transaction that occurred on Thursday, August 6th. The stock was sold at an average price of $150.00, for a total value of $1,607,850.00. Following the transaction, the insider owned 40,380 shares of the company’s stock, valued at $6,057,000. This represents a 20.98% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders sold 96,195 shares of company stock worth $14,854,525. 13.45% of the stock is currently owned by insiders.

Hedge Funds Weigh In On Roku

Several hedge funds have recently bought and sold shares of ROKU. Arrowstreet Capital Limited Partnership lifted its position in shares of Roku by 229.5% in the first quarter. Arrowstreet Capital Limited Partnership now owns 2,038,347 shares of the company’s stock valued at $192,868,000 after acquiring an additional 1,419,772 shares in the last quarter. Renaissance Technologies LLC boosted its stake in shares of Roku by 22.8% during the first quarter. Renaissance Technologies LLC now owns 1,565,100 shares of the company’s stock valued at $148,090,000 after acquiring an additional 290,200 shares during the last quarter. HBK Investments L P acquired a new stake in shares of Roku during the second quarter valued at $163,604,000. Bank of America Corp DE boosted its stake in shares of Roku by 5.5% during the first quarter. Bank of America Corp DE now owns 1,082,755 shares of the company’s stock valued at $102,450,000 after acquiring an additional 56,893 shares during the last quarter. Finally, Janus Henderson Group PLC increased its position in Roku by 1,320.4% during the 1st quarter. Janus Henderson Group PLC now owns 834,619 shares of the company’s stock worth $78,967,000 after purchasing an additional 775,861 shares in the last quarter. Hedge funds and other institutional investors own 86.30% of the company’s stock.

Roku Stock Performance

The stock has a market cap of $23.80 billion, a PE ratio of 68.53 and a beta of 2.05. The business has a 50-day moving average of $155.11 and a 200 day moving average of $127.79.

Roku Company Profile

Roku, Inc (NASDAQ: ROKU) operates a television streaming platform that connects consumers with digital entertainment. The company develops and licenses Roku OS, an operating system for smart televisions and streaming devices, and offers Roku-branded streaming players, Roku TVs, audio products and related accessories.

Roku also operates a platform business that distributes streaming content through its interface and supports content discovery, subscriptions and digital advertising. Its services include The Roku Channel, which provides a selection of ad-supported and premium entertainment, as well as tools that enable content providers and advertisers to reach streaming audiences.

Founded in 2002 by Anthony Wood, Roku initially became known for its streaming players and later expanded through partnerships with television manufacturers.