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Roku shares set 1-year high, notch biggest percentage gain since 2017

Roku shares set 1-year high, notch biggest percentage gain since 2017

New York, July 28, 2023 (Reuters) – Excitement was palpable in the stock market on Friday as shares of video streaming giant Roku Inc (ROKU.O) skyrocketed to their highest level in over a year. The surge came in the wake of an impressive quarterly revenue forecast, igniting optimism among investors and analysts alike.

Roku’s stock experienced a remarkable 31.4% surge, closing at $89.61, marking its most substantial daily percentage gain since November 2017. Notably, the company’s stock value has more than doubled since the beginning of the year, sending ripples of enthusiasm through the market. The day’s trading session also witnessed an astonishing addition of approximately $3 billion in market capitalization, raising the company’s overall value to a staggering $12.6 billion, according to data from Refinitiv.

The video-streaming pioneer reported robust financial results for the quarter ended in June, surpassing expectations and further fueling investor optimism. The surge in digital ad sales played a crucial role in Roku’s strong guidance, outperforming consensus estimates. Encouragingly, this upbeat performance came on the heels of Meta Platforms (META.O) and Alphabet (GOOGL.O) delivering similarly promising forecasts and reporting improved ad sales in their recent quarters.

The influence of these positive outcomes was evident in the market, as shares of Meta Platforms rose by 4.4%, while Alphabet experienced a 2.5% increase, collectively contributing to a 1% gain in the S&P 500 index (.SPX).

As the news of Roku’s remarkable performance spread, numerous brokerages were quick to raise their price targets on the company. D.A. Davidson, among them, increased its price target to $81 and enthusiastically reaffirmed its “buy” rating on Roku’s stock.

In a note to investors, D.A. Davidson analysts expressed confidence in Roku’s ability to capitalize on the ongoing secular shift of linear TV advertising dollars migrating to over-the-top (OTT) platforms. The management’s strong belief in the company’s potential amid evolving industry trends buoyed investor sentiment.

However, while the outlook remains bright, Roku’s leadership is also mindful of the challenges posed by the ever-changing advertising landscape. The company acknowledged the expectation of continuing demanding ad trends throughout the second half of the year.

Nonetheless, Roku is showing no signs of slowing down in its quest for growth. The company reported a significant increase of 1.9 million “active accounts” compared to the previous quarter, now boasting a staggering 73.5 million active accounts, underlining its robust and expanding user base.

This resurgence of Roku and its exceptional performance is emblematic of the growing importance of video streaming services in the modern media landscape. As consumer preferences shift towards digital content consumption, Roku stands at the forefront of this transformation, reaping the benefits of its forward-looking strategies and innovative offerings.

Roku Inc’s impressive surge to a year-high, driven by an upbeat revenue forecast and robust results, has underscored the company’s position as a major player in the video streaming industry. With a rapidly expanding user base and a focus on capitalizing on the evolving advertising landscape, Roku seems poised for continued growth and success in the months ahead. Investors and industry experts alike eagerly await further developments as the company navigates the exciting opportunities and challenges that lie ahead.


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