What happened

Roku (NASDAQ:ROKU) stock jumped out of the gate Monday, rising 5.1% before retracing to enjoy a still respectable 3.4% gain in trading as of noon EST -- and if you own shares of Roku, you can thank the friendly analysts at Wedbush for your winnings.

Predicting that a continuation of the COVID-19 crisis will accelerate "adoption" of Roku streaming devices, Wedbush announced it is raising its price target on Roku stock by a staggering 37.5%, to $220 a share, reports TheFly.com.

Glowing green arrow climbs on a stock screen.

Image source: Getty Images.

So what

The news isn't quite as great as it sounds. For one thing, Roku stock already costs nearly $210 a share, so in fact, all Wedbush is really promising here is less than a 5% gain over the next 12 months. For another, Wedbush recognizes that this isn't a really big gain to look forward to in the short term. Accordingly, it's holding its rating on Roku stock at just "neutral."

Now what

That being said, Wedbush continues to believe Roku will "grow revenue and profits over the long-term," reports TheFly, as advertisers increasingly shift their ad buying to Roku's service.

The real question is how "long-term" investors will be willing to wait to see those profits. According to data compiled by S&P Global Market Intelligence, most analysts doubt Roku will turn profitable before 2023 at the earliest. Meanwhile, despite rapidly rising revenues, Roku continues to lose money and burn cash -- racking up $138.6 million in GAAP losses over the past year and $38.3 million in negative free cash flow.

Until Roku generates some hard profit numbers to hang a valuation on, expect its shares to remain volatile.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.