Market Overview

Citron Goes Full Bull On Roku

Citron Goes Full Bull On Roku

Roku Inc (NASDAQ: ROKU) popped 4.4 percent Friday on a new endorsement from short seller Citron Research.

“The OTT movement has become a megatrend that cannot be ignored and the numbers around ROKU have completely changed since our Nov. 29 tweet that [have] made us cover our short and actually go LONG ROKU,” Citron’s Andrew Left said in a report.

Left reversed a previously bearish position in recognition of Roku’s lag in the OTT space.

ROKU is trading at the largest discount ever to OTT peers despite being the only OTT pure play that generates ad revenue,” he said. 

Considering Netflix, Inc. (NASDAQ: NFLX)’s per-subscriber value and the price Walt Disney Co (NYSE: DIS) paid for BAMTech, Left considers Roku significantly undervalued. As OTT draws advertising from Facebook Inc. (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOGL), Roku could become a more obvious outperformer.

Additionally, Left said he suspects Roku could become an attractive takeover target for Netflix, particularly as it provides access to ad revenue and as its subscriber growth outpaces those of Comcast Corporation (NASDAQ: CMCSA) and AT&T, Inc. (NYSE: T). By Left’s assessment, Roku would rank third in the U.S. if categorized as a cable provider.

“The move to cutting the cord and OTT advertising is real and it is a megatrend that Citron not only does not want to be short, but at this valuation I want to be long." 

Related Links:

Citron Hits Hailiang Education Group With Critical Report

Inogen Hit By Citron Report; Analyst Rebuttal Calls This 'An Excellent Entry Point'

Photo courtesy of Roku.

Posted-In: Andrew Left Citron ResearchNews Short Sellers Best of Benzinga


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