Fallen, Not Beaten - Media Player for the Masses (PT $38)

Roku had an insane path up to its all-time high. I knew of the product and its popularity and had set a PT of $35 for when it made its first post-IPO earnings call. Once it started rocketing up, I hit it and closed out my position. I'm sure others were as stunned as I was to watch it continue to climb and I'm sure Anthony Wood didn't know what to think once he was a billionaire for a short while. The price moved in waves and eventually started finding its real footing around $45. It climbed once more as a bull trap before earnings , only to crash down back to reality as many had speculated.

Given this year's market climate and an expiring lockup period, we can now see a nice bounce happening off a new, and more appropriate, fib chart for the stock. That $45ish hard line for market value will persist for some time, but for now the stock has been beaten to where I'd felt it was appropriate last year. Have no fear though, the Roku story is indeed spreading. It's getting stronger and is unquestionably the media player that the masses prefer for its simplicity and intuitiveness. Chromecast is too technical and AppleTV is too expensive. Roku is the real winner for the streaming, cord cutting, value seeking culture we entrench ourselves into more and more each day.

The price may linger here in the low $30s for some time without a catalyst, but the next call should be solid with some great forward guidance. Early part of the year is seasonally weak, so the last guidance to now wasn't crazy. Summer is coming and people will be indoors cooling off and students will be digesting media over their breaks and staying up to date with show trends. Without being aggressive and letting Roku slide back up in a more appropriate manner, I can see a $36-38 PT being hit short term. With more partnerships sure to come, along with expansion and updated marketing initiatives, Roku will be a steady player as it makes its way back to $40. I don't see it getting anywhere near the $45 line again until the end of the year and assuming market conditions are less volatile than they are now.

Trade this with a $40 ceiling in mind and as a good, long term hold as a streaming, media and entertainment play.


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