Roku Sees Unusually High Options Volume (NASDAQ:ROKU)

Key Points

• Unusually high options activity: Traders purchased 12,705 Roku call options, 179% above the average volume of 4,546 contracts.
• Strong quarterly performance: Roku reported adjusted EPS of $1.20 versus the $0.55 consensus estimate, while revenue increased 24.1% year over year to $1.50 billion. Advertising revenue growth and improved margins drove a sharp rise in profitability.
• Fox deal progresses amid mixed investor signals: Fox received all required foreign regulatory approvals for its roughly $22 billion acquisition of Roku, but Roku provided no forward guidance because of the pending transaction. Analyst views remain mixed, with upgrades offset by downgrades and a consensus “Hold” rating.

Roku, Inc. (NASDAQ:ROKU - Get Free Report) was the recipient of some unusual options trading on Tuesday. Traders acquired 12,705 call options on the company. This represents an increase of 179% compared to the average volume of 4,546 call options.

Roku News Roundup

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 Transactions at Roku

In related news, insider Charles Collier sold 20,538 shares of the company's stock in a transaction on Monday, October 5th. The stock was sold at an average price of $151.63, for a total transaction of $3,114,176.94. Following the transaction, the insider owned 22,700 shares of the company's stock, valued at $3,442,001. This represents a 47.50% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available at this link. 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 stock was sold at an average price of $151.09, for a total value of $302,180.00. Following the completion of the transaction, the director owned 9,629 shares of the company's stock, valued at $1,454,845.61. The trade was a 17.20% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders sold 96,195 shares of company stock valued at $14,854,525. 13.45% of the stock is owned by company insiders.

Institutional Trading of Roku

Several hedge funds and other institutional investors have recently bought and sold shares of the company. Ashton Thomas Private Wealth LLC grew its position in Roku by 18.5% in the 3rd quarter. Ashton Thomas Private Wealth LLC now owns 2,579 shares of the company's stock valued at $393,000 after buying an additional 402 shares in the last quarter. Heritage Family Offices LLP bought a new stake in shares of Roku during the 3rd quarter worth about $93,000. Calamos Advisors LLC raised its position in shares of Roku by 15.9% during the 3rd quarter. Calamos Advisors LLC now owns 376,627 shares of the company's stock worth $57,353,000 after buying an additional 51,627 shares in the last quarter. Kestra Advisory Services LLC raised its position in shares of Roku by 54.1% during the 3rd quarter. Kestra Advisory Services LLC now owns 10,753 shares of the company's stock worth $1,637,000 after buying an additional 3,775 shares in the last quarter. Finally, 3Chopt Investment Partners LLC lifted its stake in shares of Roku by 11.8% in the 3rd quarter. 3Chopt Investment Partners LLC now owns 3,924 shares of the company's stock worth $598,000 after acquiring an additional 415 shares during the period. 86.30% of the stock is owned by institutional investors.

Analyst Ratings Changes

ROKU has been the topic of several recent analyst reports. BMO Capital Markets upgraded shares of Roku from a "market perform" rating to an "outperform" rating in a research report on Tuesday. Zacks Research upgraded shares of Roku from a "hold" rating to a "strong-buy" rating in a research report on Tuesday, August 11th. Fox Advisors set a $157.00 price target on Roku in a research note on Friday, July 17th. Weiss Ratings upgraded Roku from a "hold (c)" rating to a "hold (c+)" rating in a report on Thursday, October 8th. Finally, Guggenheim downgraded 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 note on Friday, August 7th. One analyst has rated the stock with a Strong Buy rating, seven have assigned a Buy rating and nineteen have given a Hold rating to the stock. According to data from MarketBeat, the stock presently has a consensus rating of "Hold" and a consensus price target of $156.17.

Roku Stock Performance

Shares of NASDAQ:ROKU traded up $4.53 during trading on Tuesday, reaching $160.05. 694,760 shares of the stock were exchanged, compared to its average volume of 3,262,002. Roku has a 12-month low of $78.53 and a 12-month high of $160.38. The firm's 50-day moving average price is $155.11 and its 200 day moving average price is $127.79. The firm has a market cap of $23.75 billion, a price-to-earnings ratio of 68.46 and a beta of 2.05.

Roku (NASDAQ:ROKU - Get Free Report) last issued its earnings results on Monday, November 2nd. The company reported $1.20 EPS for the quarter, beating analysts' consensus estimates of $0.55 by $0.65. The business had revenue of $1.50 billion for the quarter, compared to the consensus estimate of $1.41 billion. Roku had a net margin of 6.82% and a return on equity of 13.73%. The business's revenue for the quarter was up 24.1% compared to the same quarter last year. During the same quarter last year, the firm posted $0.16 EPS. As a group, equities research analysts forecast that Roku will post 2.97 EPS for the current year.

Roku Company Profile

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.

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