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Why Roku Shares Jumped 5% on Tuesday Morning

By Anders Bylund – Dec 7, 2021 at 1:12PM

Key Points

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The media-streaming specialist is taking steps to expands its European business, and today was also a good market day for growth-oriented stocks in general.

What happened

Shares of media-streaming technology expert Roku (ROKU -5.06%) rose as much as 4.9% on Tuesday morning before falling back to a milder gain of 3.4% by noon ET. There were two good reasons behind Roku's jump. First, the market as a whole decided that it had been mistreating growth stocks recently in light of some positive coronavirus news. Second, Roku took a small but meaningful step in the quest to expand its business overseas.

So what

This morning, several sources indicated that existing vaccines look effective against the omicron variant of the coronavirus and that this ultra-virulent version of the disease appears to cause milder health problems in the people it infects. That's good news for consumers and businesses around the world, and it was no surprise to see the stock market breathe a collective sigh of relief. The tech-heavy Nasdaq Composite index was up by 3% at the time of this writing, ahead of the broader S&P 500 index at 2%.

As of Monday evening, Roku shares had fallen 24% in three weeks. The positive COVID-19 news lifted a huge weight off the growth stock.

Furthermore, Roku also announced that it is opening a new office in Amsterdam in support of its European expansion plans. The office will have roughly 150 Roku employees in various fields, including finance and legal functions, marketing, and business development.

A blue charting arrow jumping skyward from a black trampoline.

Image source: Getty Images.

Now what

Roku's international growth plan is in its early chapters. The company currently has offices in the U.S., China, and four European countries (including the upcoming Dutch location). It's media-streaming players are available and supported in a patchwork of geographic markets, with only three points of presence in Europe.

The Amsterdam office represents a significant boost to Roku's overall head count, which stood at 1,925 full-time employees by the end of 2020. As a longtime Roku shareholder myself, I'm thrilled to see the company putting its back into this market-expanding effort.

At the same time, Roku's share prices still sit more than 50% below July's all-time highs. In my eyes, the stock is selling at an unreasonable discount even after today's big jump. Roku is one of my favorite plays on the streaming media market, especially at these lower prices.

Anders Bylund owns shares of Roku. The Motley Fool owns shares of and recommends Roku. The Motley Fool has a disclosure policy.

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