Market Overview

Roku Analyst Warns Short Sellers To Close Their Positions

Roku Analyst Warns Short Sellers To Close Their Positions

Citron Research's Andrew Left laid out the case for shorting Roku Inc (NASDAQ: ROKU) in late 2017 and debated Needham's Laura Martin, who took the other side of the trade. On Feb. 2, Martin released a new report that warned short sellers to close their position in Roku for six reasons.

The Analyst

Needham's Martin maintains a Buy rating on Roku's stock with an unchanged $50 price target. (See the analyst's track record here.) 

The Thesis

Martin named six reasons for closing short Roku positions: 

  • Roku's fourth-quarter earnings report Feb. 21 could "over-deliver."
  • Roku's strategic position within the streaming video space is improving.
  • Roku's moats are also improving.
  • With a $4-billion market cap, Roku's stock "should be added" to the S&P indices in March and Russell indices in June, resulting in passive money managers "buying for the first time." 
  • Roku's valuation on a sales, OIBDA, P/E and free cash flow basis makes the stock "inexpensive."
  • Expectations for Roku to be acquired by a larger company remain high given the stock's market cap of $4 billion versus $115 billion for Netflix, Inc. (NASDAQ: NFLX).

Price Action

Shares of Roku were trading lower by 1.6 percent Monday morning.

Related Links:

Citi Analyst Sees Roku Falling 45%, Downgrades To Sell

Roku Falls After Morgan Stanley Says Long-Term Earnings Potential Isn't Clear

Photo courtesy of Roku. 

Latest Ratings for ROKU

May 2020Stephens & Co.DowngradesOverweightEqual-Weight
May 2020WedbushMaintainsNeutral
May 2020RBC CapitalMaintainsOutperform

View More Analyst Ratings for ROKU
View the Latest Analyst Ratings


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