Recently, Roku (ROKU) shares have been weak. After gaining close to 500% year-to-date, the stock is trading 30% below its all-time high. Investors have lost more than 18% in September.
The sell-off in overvalued stocks impacted the company. Apple launched its streaming service last week, which drove Roku shares lower. The losses continued after Comcast unveiled its streaming product on Thursday. Also, an analyst downgrade drove the shares lower in early market trading today.
Pivotal Research expects Roku stock to fall 55%
Investment firm Pivotal Research initiated coverage on Roku. Pivotal Research has a “sell” rating on the stock. The firm expects increasing competition to impact company sales going forward. According to a CNBC report, Pivotal analyst Jeffrey Wlodarczak expects Roku shares to fall 55% since it’s still overvalued.
While Roku stock rose close to 2.5% on Thursday, it’s trading 8.2% lower today.
Roku launches new product line up
On Thursday, the company unveiled its latest streaming player devices for domestic and some international markets. According to the company’s press release, The Roku Express device is priced at $29.99 and offers HD streaming. The Roku Ultra, priced at $99.99, provides HD, 4K, and HDR picture quality. The device has other features like fast channel launch, personal shortcuts, and a mute button.
Other devices in the line up include The Roku Express+, Premiere, Streaming Stick+, Streaming Stick+ HE, and Ultra LT. The company will expand its streaming device sales to international markets like the United Kingdom, Canada, and the Republic of Ireland.
During the product launch, Roku’s vice president, Mark Ely, said, “We’re driven by the goal of delivering an exceptional streaming experience to our customers that includes endless entertainment and intuitive ways to find it.”
He also said, “Our new streaming player lineup continues to offer a device for every type of streamer. Whether you’re streaming to your TV for the first time or are a cord-cutting power-house who wants our ultimate streaming device – we’ve got something for everyone.”
Huge market opportunity
While Roku continues to fight off competition from bigger players in the streaming device segment, it still leads the US markets. According to a Cord Cutting study, around 60 million TV households will have streaming access on their televisions in the next five years.
The report stated that 2 million Americans have “cut the cord” this year. The global populace is quickly moving away from Pay TV subscriptions. If the forecasts from the study come true, streaming subscribers will outpace pay-TV viewers by the end of 2024.
Roku is also expanding its TV licensing program in Europe. The company partnered with Hisense to launch Roku TV models in the fourth quarter. The company’s foray into international markets will keep investors interested and drive its revenue growth.
Analysts have a 12-month average target price of $133.07 for Roku, which indicates an upside potential of more than 9% from the current price.