Roku (NASDAQ:ROKU) Stock Sees Heavy Call Option Buying

Roku, Inc. (NASDAQ:ROKU) was the recipient of unusually large options trading on Tuesday. Investors bought 12,705 call options on the stock. This is an increase of approximately 179% compared to the average volume of 4,546 call options.

Key Roku News

Here are the key news stories impacting Roku this week:

• Positive Sentiment: Strong Q3 results: Roku reported $1.20 in adjusted earnings per share versus the $0.55 consensus estimate, while revenue rose 24.1% year over year to $1.50 billion, exceeding expectations of $1.41 billion. Net income reached $183 million, supported by stronger advertising profitability and lower marketing expenses. MarketBeat Roku earnings report
• Positive Sentiment: Advertising momentum: Advertising revenue grew 23%, and improved ad margins helped drive a roughly sevenfold increase in profit from the prior-year quarter. The results reinforce the case that Roku’s platform business is gaining operating leverage. The Motley Fool advertising and profit report
• Positive Sentiment: Fox transaction advances: Fox said it had received all required foreign regulatory approvals for its planned approximately $22 billion acquisition of Roku, narrowing the deal spread and reducing a key closing risk. MSN Fox-Roku deal report
• Neutral Sentiment: Limited forward guidance: Because of the pending Fox acquisition, Roku did not hold an earnings call or provide financial outlook. That makes the strong quarter supportive for sentiment but leaves investors with less visibility into standalone future performance. Roku third-quarter financial results
• Negative Sentiment: Analyst downgrade: Rosenblatt Securities lowered Roku from “buy” to “neutral” and set a $160 price target, suggesting limited upside after the stock’s strong run and the earnings-driven rally. Ticker Report Roku downgrade

Insider Activity

In other Roku news, CFO Dan Jedda sold 7,000 shares of the company’s stock in a transaction that occurred on Thursday, October 15th. The stock was sold at an average price of $152.84, for a total value of $1,069,880.00. Following the completion of the sale, the chief financial officer directly owned 67,811 shares in the company, valued at $10,364,233.24. This represents a 9.36% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Neil Hunt sold 2,000 shares of the stock in a transaction on Thursday, October 1st. The shares were sold at an average price of $151.09, for a total value of $302,180.00. Following the transaction, the director directly owned 9,629 shares of the company’s stock, valued at approximately $1,454,845.61. The trade was a 17.20% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 96,195 shares of company stock valued at $14,854,525 over the last 90 days. Corporate insiders own 13.45% of the company’s stock.

Hedge Funds Weigh In On Roku

A number of hedge funds and other institutional investors have recently modified their holdings of the stock. Signature Equity Partners LLC raised its holdings in Roku by 1,225.0% during the 3rd quarter. Signature Equity Partners LLC now owns 212 shares of the company’s stock worth $32,000 after buying an additional 196 shares during the period. CX Institutional lifted its stake in Roku by 44.1% during the third quarter. CX Institutional now owns 281 shares of the company’s stock valued at $43,000 after buying an additional 86 shares in the last quarter. Elevation Wealth Partners LLC boosted its holdings in shares of Roku by 208.7% in the second quarter. Elevation Wealth Partners LLC now owns 318 shares of the company’s stock worth $44,000 after buying an additional 215 shares during the period. Mirae Asset Global Investments Co. Ltd. acquired a new position in shares of Roku in the third quarter worth about $46,000. Finally, Coppell Advisory Solutions LLC acquired a new position in shares of Roku in the second quarter worth about $47,000. Institutional investors and hedge funds own 86.30% of the company’s stock.

Roku Price Performance

Shares of NASDAQ:ROKU traded up $4.53 on Tuesday, reaching $160.05. 694,760 shares of the company traded hands, compared to its average volume of 3,262,002. Roku has a fifty-two week low of $78.53 and a fifty-two week high of $160.38. The company’s 50 day moving average is $155.11 and its 200-day moving average is $127.79. The stock has a market capitalization of $23.75 billion, a PE ratio of 68.46 and a beta of 2.05.

Roku (NASDAQ:ROKU) last released its quarterly earnings data on Monday, November 2nd. The company reported $1.20 earnings per share for the quarter, topping the consensus estimate of $0.55 by $0.65. The business had revenue of $1.50 billion during the quarter, compared to analyst estimates of $1.41 billion. Roku had a return on equity of 13.73% and a net margin of 6.82%. The company’s revenue was up 24.1% compared to the same quarter last year. During the same period last year, the company posted $0.16 EPS. As a group, analysts expect that Roku will post 2.97 EPS for the current year.

Wall Street Analyst Weigh In

ROKU has been the topic of a number of research analyst reports. Needham & Company LLC reaffirmed a “buy” rating on shares of Roku in a report on Tuesday. Seaport Research Partners downgraded shares of Roku from a “buy” rating to a “neutral” rating in a report on Friday, August 7th. Guggenheim lowered shares of Roku from a “buy” rating to a “neutral” rating and raised their price objective for the company from $145.00 to $160.00 in a research report on Friday, August 7th. Fox Advisors set a $157.00 price objective on shares of Roku in a research report on Friday, July 17th. Finally, JPMorgan Chase & Co. assumed coverage on shares of Roku in a research note on Monday, August 24th. They issued a “neutral” rating and a $160.00 price objective on the stock. One equities research analyst has rated the stock with a Strong Buy rating, seven have issued a Buy rating and nineteen have issued a Hold rating to the stock. Based on data from MarketBeat.com, the stock has a consensus rating of “Hold” and a consensus target price of $156.17.

About Roku

Roku, Inc (NASDAQ: ROKU) operates a television streaming platform that connects consumers with digital entertainment. The company develops and licenses Roku OS, an operating system for smart televisions and streaming devices, and offers Roku-branded streaming players, Roku TVs, audio products and related accessories.

Roku also operates a platform business that distributes streaming content through its interface and supports content discovery, subscriptions and digital advertising. Its services include The Roku Channel, which provides a selection of ad-supported and premium entertainment, as well as tools that enable content providers and advertisers to reach streaming audiences.

Founded in 2002 by Anthony Wood, Roku initially became known for its streaming players and later expanded through partnerships with television manufacturers.