What happened

Shares of streaming TV leader Roku (ROKU 11.62%) are winning the ratings wars today -- at least among investors -- and you can thank Ark Invest CEO Cathie Wood for that.

As revealed on the Ark funds website late last night, the growth investing icon spent nearly $47 million snapping up more than 584,500 shares of Roku yesterday. Today, despite two other Wall Street analysts cutting their price targets on Roku (according to The Fly), the stock is on a tear -- up 6.5% as of 10:40 a.m. ET.      

So what

Wood's flagship ARK Innovation ETF (ARKK 2.57%) hasn't been doing so hot this year, losing more than half its value since 2022 began. And yet, many growth stock investors still look to Wood for clues about which way the tech winds are blowing, with some even sometimes going so far as to imitate her trades.

These investors probably noticed, therefore, when after buying Roku stock pretty aggressively throughout most of the months of May and June (more than 587,000 shares acquired) -- Ark's several funds abruptly ceased buying Roku on June 22 after the stock soared past $90 a share. Despite multiple fallbacks below that level in July, Wood steadfastly refused to be enticed. But that changed abruptly yesterday, when Roku stock briefly fell below $80 a share.

Wood sprang into action, and in a few hours of frenzied trading, bought nearly as much Roku stock as she'd bought in the previous two months -- combined.

Now what

Does that make sense? It might.

Consider: This morning, investment banks Truist Financial and Benchmark both cut their price targets on Roku stock, to $120 and $150, respectively, warning that although Roku is "executing well" (said Truist), in light of the falloff in advertising spending seen lately, the company's "2022 revenue guidance needs to come down" (said Benchmark).

And yet, while these analysts are modestly more cautious about Roku heading into the company's second-quarter earnings report tomorrow, both Truist and Benchmark agree with Wood that the stock is a buy. Indeed, if you take Wood's presumed buy price of $80 as a starting point, even the more conservative valuation on Roku -- Truist's guess at $120 a share -- implies there could be 50% upside in these shares.

Granted, Roku isn't an obvious bargain today. The stock sells for 63 times trailing free cash flow and 82 times earnings. Still, analysts have Roku pegged to grow its free cash flow (FCF) 33% next year, and to more than triple FCF to $593 million over the next four years. Given that this yields a valuation of 19 times FCF four years from now, I'm still not convinced this is a compelling value, but Wood, it seems, is convinced -- and Wall Street still agrees with her.