Roku Target of Unusually Large Options Trading (NASDAQ:ROKU)

Key Points

• Unusual options activity: Investors bought 26,249 Roku call options on Monday, about 85% above the stock’s average daily call volume. That suggests a notable bullish bet in the options market.
• Mixed analyst sentiment: Analysts remain generally positive overall, with 19 Buy ratings and 8 Hold ratings and a consensus target price of $149.25. Recent moves included Citigroup reaffirming an outperform rating, while Oppenheimer and Zacks were more cautious.
• Strong stock and earnings backdrop: Roku shares fell to $141.37 in Monday trading but have been supported by a strong quarterly report, including EPS of $0.57 versus $0.34 expected and revenue growth of 22.4% year over year. Insider selling has also been significant, with executives selling shares over the past 90 days.

Roku, Inc. (NASDAQ:ROKU - Get Free Report) saw some unusual options trading activity on Monday. Investors acquired 26,249 call options on the stock. This is an increase of approximately 85% compared to the average daily volume of 14,196 call options.

Analyst Ratings Changes

Several equities research analysts recently weighed in on the stock. Citigroup reissued an "outperform" rating on shares of Roku in a research report on Monday. Weiss Ratings reissued a "hold (c-)" rating on shares of Roku in a research report on Friday, May 15th. Zacks Research downgraded shares of Roku from a "strong-buy" rating to a "hold" rating in a research report on Tuesday, April 14th. Oppenheimer cut Roku from an "outperform" rating to a "market perform" rating in a report on Monday. Finally, KeyCorp increased their price target on Roku from $140.00 to $150.00 and gave the company an "overweight" rating in a report on Friday, May 1st. Nineteen research analysts have rated the stock with a Buy rating and eight have given a Hold rating to the company. According to data from MarketBeat.com, Roku has a consensus rating of "Moderate Buy" and a consensus target price of $149.25.

Roku Stock Performance

Shares of NASDAQ ROKU traded down $2.29 during midday trading on Monday, hitting $141.37. 21,049,637 shares of the stock traded hands, compared to its average volume of 3,289,998. Roku has a one year low of $77.64 and a one year high of $148.88. The firm has a 50-day moving average of $118.73 and a two-hundred day moving average of $106.32. The firm has a market capitalization of $20.84 billion, a P/E ratio of 106.32 and a beta of 2.06.

Roku (NASDAQ:ROKU - Get Free Report) last issued its quarterly earnings data on Thursday, April 30th. The company reported $0.57 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.34 by $0.23. Roku had a net margin of 4.06% and a return on equity of 7.64%. The firm had revenue of $1.25 billion during the quarter, compared to the consensus estimate of $1.20 billion. During the same quarter in the previous year, the firm posted ($0.19) EPS. The company's revenue for the quarter was up 22.4% compared to the same quarter last year. Equities analysts forecast that Roku will post 2.41 earnings per share for the current fiscal year.

Insider Activity at Roku

In related news, insider Gilbert Fuchsberg sold 4,376 shares of the firm's stock in a transaction that occurred on Tuesday, June 2nd. The shares were sold at an average price of $127.26, for a total transaction of $556,889.76. Following the completion of the sale, the insider owned 51,099 shares of the company's stock, valued at $6,502,858.74. This trade represents a 7.89% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Charles Collier sold 20,537 shares of the firm's stock in a transaction that occurred on Thursday, June 4th. The shares were sold at an average price of $124.94, for a total transaction of $2,565,892.78. Following the sale, the insider directly owned 15,200 shares of the company's stock, valued at $1,899,088. This trade represents a 57.47% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 706,194 shares of company stock valued at $80,756,499 over the last ninety days. Corporate insiders own 13.45% of the company's stock.

Institutional Investors Weigh In On Roku

A number of hedge funds have recently modified their holdings of ROKU. Blue Trust Inc. lifted its stake in shares of Roku by 680.0% during the 4th quarter. Blue Trust Inc. now owns 234 shares of the company's stock valued at $25,000 after buying an additional 204 shares in the last quarter. Aventura Private Wealth LLC purchased a new stake in Roku in the 4th quarter worth $26,000. Bayban increased its stake in Roku by 1,300.0% in the 1st quarter. Bayban now owns 280 shares of the company's stock worth $26,000 after buying an additional 260 shares in the last quarter. WPG Advisers LLC purchased a new stake in Roku in the 4th quarter worth $31,000. Finally, Safe Harbor Fiduciary LLC purchased a new stake in Roku in the 4th quarter worth $31,000. Institutional investors own 86.30% of the company's stock.

Key Stories Impacting Roku

Here are the key news stories impacting Roku this week:

• Positive Sentiment: Fox agreed to buy Roku for about $22 billion, paying $160 per share in cash and stock. The deal gives Roku shareholders a major takeover premium and explains the stock’s surge. Reuters: Fox to buy Roku in $22 billion deal
• Positive Sentiment: Multiple reports say the acquisition could create a larger streaming and TV-viewership platform by combining Fox’s content with Roku’s connected-TV operating system and ad network, which supports the strategic case for the deal. CNBC: Fox to buy streaming device maker Roku for $22 billion
• Neutral Sentiment: Analysts and commentary note that the takeover premium may be viewed as modest by some shareholders, which could limit additional upside unless a competing bidder emerges or deal terms change. Barron's: Roku Stock Rises. Why $22 Billion Fox Sale May Disappoint.
• Negative Sentiment: Law firms have launched shareholder investigations into whether Roku obtained a fair price in the transaction, creating potential legal overhang and deal uncertainty. PR Newswire: Ademi LLP investigation
• Negative Sentiment: Another shareholder alert from Monteverde & Associates is also probing the sale to Fox, reinforcing concerns that investors may challenge the merger terms. PR Newswire: Monteverde & Associates investigation

About Roku

Roku, Inc NASDAQ: ROKU is a technology company that develops and operates a proprietary streaming platform designed to deliver entertainment content to consumers via internet-connected devices and smart televisions. Since its inception in 2002 in California, Roku has focused on simplifying access to streaming services for viewers worldwide. The company's platform enables users to discover, access and manage a wide array of over-the-top content from major streaming services, free ad-supported channels and niche providers.

At the core of Roku's product lineup are a range of streaming players and sticks, which connect to televisions via HDMI and deliver the Roku OS experience.

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