Please ensure Javascript is enabled for purposes of website accessibility

Why Roku Stock Jumped on Friday

By Daniel Sparks – Aug 28, 2020 at 11:50AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Today's gain for the streaming-TV platform extends its strong momentum this week.

What happened

Shares of Roku (ROKU -3.87%), a provider of a streaming-TV platform, soared on Friday. As of 10:30 a.m. EDT, the stock was up 9.5%.

Roku's gain on Friday extends the stock's impressive momentum this week, which has largely been driven by bullish analyst commentary and a strong appetite in the market for growth stocks like Roku.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

The first bullish note from an analyst this week came on Monday when Citigroup analyst Jason Bazinet initiated coverage of Roku stock with a buy rating and a $180 price target. The analyst noted that the company's active accounts could grow to 70 million by 2022. Then, on Thursday, Deutsche Bank analyst Jeffrey Rand, who has a buy rating on the stock, said that not only is adoption of connected TV steadily rising in the U.S., but Roku also continues to be the leader in this important market. 

Also helping the stock this week has likely been the broader-market momentum in growth tech stocks. Highlighting this, the tech-heavy Nasdaq Composite is up 2.9% this week while the Dow Jones Industrial Average is up only 0.8%. And many rapidly growing large-cap and megacap tech stocks have risen more than 5% this week.

For the full week, Roku stock was up 19% as of this writing.

Now what

While Roku didn't provide any specific guidance in its most recent business update, the company's strong second-quarter momentum suggests the coronavirus pandemic isn't hurting the streaming-TV specialist's business much. Revenue was up 42% year over year, driven by a 46% jump in platform revenue (that is, revenue primarily from Roku's share of subscriptions and advertising on its platform).

Management did say it expects its overall revenue to "grow substantially on a year-over-year basis in the second half and for the full-year 2020, albeit not as strongly as we had anticipated prior to the pandemic." 

Daniel Sparks owns shares of Roku. The Motley Fool owns shares of and recommends Roku. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Roku Stock Quote
Roku
ROKU
$53.91 (-3.87%) $-2.17
Citigroup Stock Quote
Citigroup
C
$47.23 (-2.19%) $-1.06
Deutsche Bank Stock Quote
Deutsche Bank
DB
$10.54 (-2.50%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.