Please ensure Javascript is enabled for purposes of website accessibility

How Roku Shares Fell 17.6% in March

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

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

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.

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

*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 service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

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.