Roku Inc. ROKU The stock has struggled with losses of over 80% in the last year. Invest Arklead by Cathie Woodremains heavily invested in the streaming platform and hardware maker.
The stock could be a big winner by 2026, Wood says. Here’s a look at the thesis and what stocks could be worth four years from now.
What happened: San Jose, Calif.-based Roku is poised to grow over the next four to five years on increases in video advertising from streaming companies, according to Ark Invest thesis.
The company has a price target of $605 by 2026 with a $100 bear case and a $1,493 bull case.
Ark points to active accounts, hours streamed daily, percentage of hours streamed on ad-supported video-on-demand (VOD) platforms, and platform gross and net monetization rates as the four most important elements to Roku’s growth and potential stock price .
Roku saw stocks fall after that reported that second-quarter revenue and earnings per share fell short of Street’s estimates. Second-quarter revenue was $764.4 million, up 18% year over year. The company cited a slowdown in TV advertising spending due to macroeconomic concerns in the second quarter.
“We expect these challenges to continue in the near term as economic concerns weigh on markets worldwide,” the company said.
Roku ended Q2 with 63.1 million active accounts and added 1.8 million accounts in Q2.
wood on the other hand praised Roku after second quarter results.
“Although macroeconomic headwinds are forcing advertisers to cut advertising budgets, we believe adspend on CTV should continue to grow as consumers move away from linear television,” Wood said.
Roku’s guidance for the third quarter could be conservative after heavy advertising commitments in the presale season, Wood explained.
“As the #1 streaming platform by hours in the US, Canada and Mexico, Roku should continue to lead the ad shift from linear to digital television.”
Roku is one of the largest Ark funds…
