Roku (ROKU) shares have fallen close to 7% in early market trading today. Investors are worried after Comcast (CMCSA) announced Xfinity Flex. Notably, Xfinity Flex allows customers to access streaming services and manage other connected devices through their televisions.
Why did Roku stock fall?
According to Comcast’s press release, Xfinity Flex will add significant value for Internet streaming subscribers. The product will be available for free to all of Comcast’s broadband-only subscribers.
Xfinity Flex is equipped with over 10,000 movies and TV shows. The product comes with a 4k ultra HD streaming device and a voice remote. Matt Strauss, the vice president of Xfinity Services, Comcast Cable, said, “Xfinity Flex gives customers a radically simple, aggregated television experience that personalizes their streaming choices across a sea of apps and services.”
He also said, “Today’s Internet customers need more than speed—they want wall-to-wall WiFi coverage, simplified control of their connected home, and the best streaming experience. With Xfinity xFi and Xfinity Flex, we are including all of that and more with our Internet service, all in one place, on the best screen in the home.”
Similar to other devices like Roku, Xfinity Flex is a content aggregation platform. The product will benefit from the cord-cutting phenomenon.
Roku stock is trading 21% below its 52-week high
Roku has lost close to 19% since September 6. The stock is trading 21% below its 52-week high. The shares have been impacted by the Apple TV+ launch. Last week, Apple launched its very own streaming service priced at $4.99 per month.
With Comcast’s latest product launch, the competition in the streaming device segment is heating up. While Roku continues to lead the market, the company has to fend off competition from tech heavyweights.
Roku dominates the connected TV segment with a share of over 30% in the US, according to a Telecompetitor report. However, Roku is fighting competition from Apple TV+, Amazon’s Fire Stick (AMZN) and Google’s (GOOGL) Chromecast in this space.
Stock has gained 331% YTD
Despite the recent pullback, Roku shares have gained more than 330% YTD (year-to-date). The company beat the estimates comfortably for the last few quarters. The earnings beat and strong guidance and forecasts drove Roku stock.
Considering Roku’s leadership in the streaming device segment, the company is also an attractive acquisition target. The company has an enterprise value of $17.2 billion, which is minor compared to Apple, Amazon, and Google.
Analysts have a 12-month average target price of $129.67 for Roku stock. The target price is lower than the company’s current price of $140.