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Roku Analyst Warns Short Sellers To Close Their Positions

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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

DateFirmActionFromTo
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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