Chart of the Week: Roku Stock Making a Comeback?

April 9, 2021

In the world of video streaming, the first names that come to mind are natural Netflix Inc (NASDAQ: NFLX) and, now, Walt Disney Co (NYSE: DIS).

However, one of the companies that has flown under the radar as video streaming has boomed has been Roku Inc (NASDAQ: ROKU).

The firm allows users to watch both paid and free content on their television sets with its software built-in to many models of smart TVs.

Primarily a US-based phenomenon at the moment, Roku still has a long growth runway ahead of it. That’s because the company’s platform also offers a media and advertising service so that clients can reach consumers via streaming.

The beauty of their service is that they’re platform-agnostic, i.e. they offer all the major streaming services via their one unified platform.

Exceptional growth

Recently the company has moved more into acquiring actual content, having bought the rights to content of failed streaming firm Quibi.

With 2020 revenue growth of 58% year-on-year, Roku is clearly a high-growth stock. Investors recognised its potential as its shares gained over 150% in 2020.

However, since rallying strongly into mid-February (see below) to hit an all-time high of just over US$485, its stock duly fell to below where it started 2021.

Yet a more positive tone for growth stocks, and a bullish analyst report this week, have seen Roku shares rally over 20% in April.

Is this the start of a new upswing for one of the dark horses in the video streaming world? Only time will tell.

Roku year-to-date share price performance (US$)

Roku share price

Source: Google Finance as of 9 April 2021

Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares of any companies mentioned.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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