Please ensure Javascript is enabled for purposes of website accessibility

Why Roku Shares Rocked the Market Today

By Eric Volkman - Jun 21, 2021 at 6:20PM

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 should thank a Loop Capital analyst and monster retailer Amazon.

What happened

Investors were tuning in to Roku (ROKU -6.78%) on Monday, with the stock peaking at 4.7% over Friday's close; ultimately, it ended the day 3.9% higher. An analyst's price target was a major driver of the increase, but the company also benefited from its role in a major shopping holiday.

So what

Loop Capital analyst Alan Gould lifted his price target on Roku stock to $475 per share from the previous $450. Gould was inspired by researcher Magna Global raising its estimate for 2021 worldwide advertising revenue, with anticipated 24% year-over-year growth in digital video ads.

A family on a couch watching TV.

Image source: Getty Images.

Additionally, Gould wrote in a research note, "Roku's platform revenue should also benefit by the aggressive marketing by the streaming companies." The company operates a streaming-video operating system that is platform neutral, allowing users to access nearly every popular streaming service.

The analyst also believes that the company's native Roku Channel, fueled by recent content acquisitions and rollouts, is seeing encouraging growth in viewership. 

And a suite of Roku products is being sold at significant discounts during Amazon's (AMZN -1.85%) annual Prime Day shopping frenzy that kicked off on Monday. These often find their way into articles concerning the best Prime Day deals; this lifts Roku's visibility and should increase take-up of its products.

Now what

Roku is a top name in the streaming universe, and continues to bolster its position as a go-to neutral operating system. These two developments, particularly the Amazon Prime Day headlines, should support that momentum.

 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Roku. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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
$78.42 (-6.78%) $-5.70
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$142.10 (-1.85%) $-2.68

*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
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

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.