What happened
Shares of Roku (ROKU -10.29%) bounced on Wednesday, jumping as much as 6.7%. As of 1:08 p.m. ET, the stock was still up 4.6%.
The catalyst that sent the streaming pioneer higher was news that the company is releasing its own line of connected TVs, which could help fuel future growth.
So what
Roku announced the debut of Roku Select and Roku Plus Series TVs. The high-definition and 4K Roku-branded devices "are the first ever to be both designed and made by Roku," according to the press release.
There will be a total of 11 models ranging from 24" to 75" and ranging in price from $119 to $999. Each of the Select models will come with a Roku Voice Remote, while the Plus Series models will include the Roku Voice Remote Pro. These models, as well as the company's Roku TV Wireless Soundbar, will launch in the U.S. market this spring.
This is a natural extension of Roku's award-winning connected TV operating system (OS), which the company built from the ground up. The move to incorporate the Roku OS into a line of its own TVs leverages the company's brand recognition with consumers, while giving the company more control over upgrades and the manufacturing process. On the other hand, it may create animosity with existing partners -- particularly if Roku begins to steal market share.
Now what
Roku stock has been beaten down over the past year, with shares shedding roughly 82% of their value compared to just one year ago. However, for investors who can distinguish between a falling stock price and a business in trouble, this clearly looks like a buying opportunity.
The Roku OS is still the No. 1 smart TV OS in the U.S., and it's gradually making ground in a number of international markets. Supply chain and logistics headwinds resulted in slower account growth, but this too shall pass.
Finally, at less than 2 times sales, Roku's valuation falls squarely in bargain-basement territory, making it a steal at its current price. That makes Roku stock an unqualified buy.
