After finding support at the $100 level, shares of Roku (NASDAQ:ROKU) are at a turning point. Ahead of its quarterly earnings report on Nov. 6, ROKU stock price may either fall below $120 or may try to make another run to its 52-week high of $176.55. ROKU stock price, which is around $149, has high multiples. However, ROKU stock reflects the company’s positive outlook.
Investors have a few reasons to remain bullish on ROKU stock.
One reason to be bullish on ROKU is that Apple’s (NASDAQ:AAPL) TV App and Apple TV+ will come to the Roku platform beginning on Nov. 1. Not only does that negate the risk of Apple TV+ competing against Roku’s own streaming content, but it will drive Roku’s device sales higher. That’s because, after Apple TV+ debuts, the owners of Apple stock will have more reason to buy either an Apple TV device or a Roku stick to view Apple’s content.
The market cap of ROKU stock is $16.6 billion, while Netflix (NASDAQ:NFLX) enjoys a $129.15 billion market cap. And that’s after Netflix stock fell 28% from its 52-week highs. Look for ROKU stock price to make up the ground it lost in the wake of the Apple TV+ news.
Buyout Candidate
Disney’s (NYSE:DIS) Disney+ is a challenge to Roku, Netflix, and Apple. And Disney is not prepared to lose to them. It will allow consumers who buy a one-year subscription to Disney+ to pay just$5.83 a month for the service. Disney is being aggressive because it wants to build up its market share quickly. But since Disney stock has a $234 billion market capitalization and DIS has around $6.73 billion of cash, Disney might consider buying Roku.
A buyout of ROKU by Disney would be a step back for consumers, since ROKU offers a wide variety of content and gives viewers a choice. Still, Disney may want Roku’s operating platform, which includes streaming stick players and the Roku OS that’s built into some Smart TVs.
Roku’s Hardware Expansion
Walmart (NYSE:WMT) and Roku announced a high-quality audio solution for just $129 on Oct. 7.Roku said:
The Roku Smart Soundbar gives consumers an easy way to add better sound instantly to nearly any TV, plus with a 4K Roku streaming player built-in, it provides easy access to tons of great movies, TV and music entertainment.
The product will enable ROKU to become a one-stop option for high-quality audio that’s paired with video content.
The Bottom Line on Roku Stock
The fate of Roku stock will depend on the growth of its subscriber base, not on its revenue or profit metrics. Just as Netflix stock moves in tandem with its user base growth, so does Roku’s P/E multiples.
Roku is a leading streaming platform in the U.S. and won’t be affected by which content providers win and which lose. As Apple, Netflix, and Disney all fight for user subscriptions, Roku’s platform will strengthen, and its business will grow nicely.
Continue accumulating ROKU stock. After the company’s next earnings report, expect Roku stock price to move by a large amount in either direction.
As of this writing, the author did not hold a position in any of the aforementioned securities.
