If any modern industry has fierce competition, it’s content streaming. Having to contend with Netflix (NASDAQ:NFLX), Hulu, Amazon’s (NASDAQ:AMZN) Prime platform, Apple’s (NASDAQ:AAPL)’s TV+, as well as Disney’s (NYSE:DIS) Disney+ made it difficult for Roku (NASDAQ:ROKU) stock to make any headway in September.
In light of this, Pivotal Research analyst Jeffrey Wlodarczak assigned Roku stock an abysmal price target of $60 (yes, you read that correctly) along with a sell rating. Now, I won’t deny that there are plenty of sharks in the streaming-industry water, but is that sufficient justification for ROKU shareholders to abandon ship?
ROKU Stock Is a Solid Bet on Streaming Market’s Future
No matter how you slice it, there’s little meat left on the bone for investors in old-fashioned cable TV. The streaming revolution has literally changed the way not only millennials and Generation Z, but practically everyone watches movies and TV shows.
As the University of Nevada’s Benjamin Burroughs observes in a study on the advent of streaming’s impact on media consumption, “Streaming services are challenging the temporality or windowing of televisual content and challenging different industrial models of distribution.” In other words, the streaming revolution has made old-school cable TV obsolete because viewers have now grown accustomed to binge-watching shows when it’s convenient for them, rather than having content-distribution modalities dictated to them.
As a result, investors need to focus on companies that are willing and able to stay on the leading edge of streaming technology. I feel that ROKU stock fits the bill, as the company (along with Innovid) recently announced a partnership to measure and analyze the reach of the Roku platform’s TV campaigns.
Alison Levin, the vice president of ad sales and strategy at ROKU, justified the partnership by explaining that marketers “need tools to evaluate audience overlap and incremental reach across screens and suppliers,” while Jessica Hogue, the general manager of measurement and analytics at Innovid, added that “The ability to measure reach and frequency across ad campaigns running on linear TV and the Roku platform gives marketers deeper transparency and the ability to reduce over-frequency to drive better business outcomes.”
ROKU Maintaining Its Pioneer Status
Partnering with Innovid to push the envelope in data analytics is emblematic of Roku’s willingness to take chances in a heated marketplace — something that a smaller contender must do if it’s going to compete with giants like Disney, Apple, Netflix, and Amazon. As I see it, the ROKU stock price has room to run as the company could gain market share against its famous competitors, whose stock prices are already quite richly valued (i.e., pricey).
Therefore, I’m happy to side with Oppenheimer analyst Jason Helfstein in his assessment of the September slide in the Roku stock price as a buying opportunity. I’ll also concur with Helfstein’s outperform rating on ROKU stock, as well as his price objective of $155, which he recently raised from his previous price target of $120.
The Takeaway on Roku Stock
It was a rough September for Roku stockholders; there’s no denying that, but that’s where buying opportunities come from and I’m not afraid of some healthy competition in the content-streaming space. Sure, there are lots of sharks in the water — but when it comes to ROKU stock, I’m not smelling any blood.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.