IB Net Payout Yields Model

Roku: Embrace Q4 Volatility

Update - Dec. 15, 2023

MofettNathanson has been wrong about Roku all year with the $64 price target heading into this downgrade. The market actually following this call by selling off the stock is mind numbing. 

-Roku's (NASDAQ:ROKU) stock fell about 2% premarket on Friday after MoffettNathanson downgraded the shares to Sell from Neutral.
-The firm cut the rating but raised its price target to $66 from $64 using its imputed EBITDA valuation approach with an 18% theoretical EBITDA margin on its 2025E revenues and a 10.0x EV/EBITDA multiple, as per the analysts.

Update - Nov. 3, 2023 

Roku reported an impressive quarter, but the most important aspect was guidance for Q4. 

  • Forecast $955 million in Q4 net revenue, better than the consensus $951.3 million
  • Adj. EBITDA $10 million
The stock has surged due to the drop from nearly being related to fears Roku would cut guidance due to the Hollywood strikes pressure on ad revenues. 

Finviz Chart

Original article posted on Oct. 24 

  • Roku's Q4 sales targets may be difficult to achieve due to writer and actor strikes reducing content for the video streaming market.
  • Despite potential Q4 weakness, investors should focus on Roku's active accounts and streaming hours growth for long-term value.
  • ROKU stock is cheap at only 2x '24 sales targets with a bonus cash balance of $1.8 billion.
Only at the start of September, Roku (NASDAQ:ROKU) boosted Q3 sales targets in a sign business was far better than expected. Now, analysts forecast the video streaming service will struggle to hit targets due to writer and actor strikes. My investment thesis is ultra Bullish on the stock trading at the lows now despite a Q3 guide up mid-quarter.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 


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