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How Roku Shares Fell 17.6% in March

By Anders Bylund - Updated Apr 8, 2021 at 8:51PM

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The company didn't really do anything to deserve a drastic discount last month. That didn't stop market forces from making it happen anyhow.

What happened

Shares of Roku (ROKU 11.82%) fell 17.6% in March 2021, according to data from S&P Global Market Intelligence. The media-streaming technology expert didn't actually do anything to deserve a dramatic haircut, but the stock was swept up in a couple of market-moving events beyond Roku's control.

So what

Roku entered the month of March on a full head of steam. The company absolutely smashed Wall Street's expectations in February's fourth-quarter report. Share prices had increased by 248% in 52 weeks. The massive gains set Roku up for a sharp correction when the market tenor turned away from high-growth stocks that had posted large gains during the coronavirus era in favor of low-risk value investments. In particular, Roku was and is a large investment of money manager Cathie Wood's popular ARK Innovation ETF (ARKK 11.82%) whose constituents were singled out as specific targets in this growth-stock drop.

A cartoonish rocket that has crashed on a wooden surface.

Image source: Getty Images.

Now what

As an unprofitable company with a $46 billion market cap and sky-high valuation ratios, Roku is vulnerable to this type of broad market retreat from risky growth stocks. It may not be your cup of tea, but I'm sorely tempted to add to my own Roku holdings on volatility-based dips like this one.

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Roku Stock Quote
Roku
ROKU
$97.84 (11.82%) $10.34
ARK ETF Trust - ARK Innovation ETF Stock Quote
ARK ETF Trust - ARK Innovation ETF
ARKK
$43.60 (11.82%) $4.61

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