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Technology Stocks : Roku
ROKU 156.39+1.6%Aug 7 4:00 PM EDT

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From: zax4/25/2019 8:05:04 PM
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Roku Stock Could Be a Big Winner This Earnings Season

Shares of Roku (NASDAQ: ROKU) catapulted higher to start the year, with Roku stock rising from under $30 in late 2018, to above $70 by March 2019. The catalyst? A robust beat-and-raise holiday quarter earnings report which put to rest competition concerns, and underscored that Roku remains the unchallenged, runaway leader in the SVOD (streaming video on demand) aggregation market.
But, this rally has run into some resistance lately, as competition concerns have once again reared their ugly head. Specifically, Apple (NASDAQ: AAPL) just launched its TV and TV+ apps, while Amazon (NASDAQ: AMZN) is reportedly investing millions into expanding its arsenal of ad-supported streaming channels.

Both of those developments theoretically pose competitive risks to Roku, and investors are freaking out. Consequently, the stock has fallen sharply over the past few weeks.

The steep fall in Roku is actually a welcome sign for bulls. Next up for Roku? First quarter earnings, due in early May. Those numbers will likely be pretty good, given multiple operational catalysts on both the consumer and ad tech fronts. With the stock now well off its early 2019 highs, those good numbers should be enough to spark a rally in Roku.

That’s why I’m bullish on ROKU this earnings season. A few weeks ago, this stock was fully valued, and even the best numbers likely wouldn’t have sparked a rally. Now, though, the stock is much more reasonably valued, and technically beaten up. Against that backdrop, good numbers should spark a healthy rally.

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