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2 Roku-Heavy ETFs to Play If You Want to Follow Cathie Wood
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Investing in speculative companies with long-term profit potential has been Cathie Wood's trademark strategy. Cathie Wood, famous for the success of her Ark Investment’s winning products, is normally tech-centric.
But the tech space has borne the brunt lately due to higher rates. Consequently, some of Cathie Wood’s products suffered a sad fate. Notably, ARK Innovation ETF (ARKK - Free Report) has lost 7.9% this year (as of May 7, 2024). However, several tech-darlings didn’t have to undergo such a loss. In fact, ARK Next Generation Internet ETF (ARKW - Free Report) and Ark Fintech Innovation ETF (ARKF - Free Report) have added 7.8% and 8.1%, respectively, this year.
If you want to follow Cathie Wood’s latest stock bet, you will see that Ark funds have been actively investing in Roku (ROKU - Free Report) . Wood purchased a significant number of shares in April, indicating her confidence in the company's potential despite its recent stock price decline.
ROKU stock has declined more than 30% so far this year (as of May 7, 2024). Wood's investment strategy often involves doubling down on favored holdings during periods of price weakness. ROKU has 8% weight each in ARKW and ARKK.
Let’s take a deeper look.
Roku's Dominant Position in the Streaming Industry
Roku has positioned itself as a prominent player in the streaming industry, boasting over 80 million active accounts. The company manufactures streaming devices and licenses its software, thus solidifying its position as a major player in the market.
Upbeat Q1 Earnings
Roku reported first-quarter 2024 loss of 35 cents per share, narrower than the Zacks Consensus Estimate of a loss of 64 cents. The company had incurred a loss of $1.38 per share in the year-ago quarter. Revenues increased 18.9% from the year-ago quarter’s level to $881.47 million and beat the consensus mark by 3.58%.
Growth of The Roku Channel’s streaming households and streaming hours drove first-quarter performance. Streaming households’ net additions were 1.6 million in the first quarter, taking the total to 81.6 million globally, reflecting greater engagement and more monetization opportunities.
Upward Earnings Estimate Revisions
In the past seven days, one out of nine analysts upped earnings estimates on Roku for the ongoing quarter, while as many as eight analysts took the same route over the past month. For the full-year, one analyst raised the estimate and seven did the same over the past 30 days.
The Zacks Consensus Estimate for the current quarter stands at a loss of 45 cents, narrower than a loss of 48 cents loss projected seven days ago and 57 cents loss projected a month ago. For the full year, the consensus estimate for loss has narrowed by 22 cents in the past month and by 3 cents over the past week.
Roku’s Price Target
Based on short-term price targets offered by 17 analysts, the average price target for Roku comes to $76.82. The forecasts range from a low of $52.00 to a high of $105.00. The average price target represents an increase of 28.9% from the last closing price of $59.55 (as of May 8, 2024).
Any Reason to Worry?
Some analysts have expressed concerns about Roku's future, citing ongoing losses and fierce competition in the industry. Morningstar analyst Matthew Dolgin acknowledged Roku's strong performance but remains skeptical about the stock due to its elevated customer acquisition costs and the lack of durable competitive advantages.
Morningstar analyst Matthew Dolgin offered a "no-moat" rating on Roku, per a Street.com article, as quoted on Yahoo. Other analysts, such as those at Jefferies and Wells Fargo, have also offered cautious outlooks, according to the abovementioned source.
ETFs in Focus
If you want to follow Cathie Wood but still fear the issues pointed out by Morningstar,Jefferies and Wells Fargo analysts, you can take the ETF route and play ARKK and ARKW. An ETF approach minimizes the company-specific risks to a large extent. While ROKU’s stock has seen a bloodbath this year, ARKW is in the green and ARKK has seen lesser losses.
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2 Roku-Heavy ETFs to Play If You Want to Follow Cathie Wood
Investing in speculative companies with long-term profit potential has been Cathie Wood's trademark strategy. Cathie Wood, famous for the success of her Ark Investment’s winning products, is normally tech-centric.
But the tech space has borne the brunt lately due to higher rates. Consequently, some of Cathie Wood’s products suffered a sad fate. Notably, ARK Innovation ETF (ARKK - Free Report) has lost 7.9% this year (as of May 7, 2024). However, several tech-darlings didn’t have to undergo such a loss. In fact, ARK Next Generation Internet ETF (ARKW - Free Report) and Ark Fintech Innovation ETF (ARKF - Free Report) have added 7.8% and 8.1%, respectively, this year.
If you want to follow Cathie Wood’s latest stock bet, you will see that Ark funds have been actively investing in Roku (ROKU - Free Report) . Wood purchased a significant number of shares in April, indicating her confidence in the company's potential despite its recent stock price decline.
ROKU stock has declined more than 30% so far this year (as of May 7, 2024). Wood's investment strategy often involves doubling down on favored holdings during periods of price weakness. ROKU has 8% weight each in ARKW and ARKK.
Let’s take a deeper look.
Roku's Dominant Position in the Streaming Industry
Roku has positioned itself as a prominent player in the streaming industry, boasting over 80 million active accounts. The company manufactures streaming devices and licenses its software, thus solidifying its position as a major player in the market.
Upbeat Q1 Earnings
Roku reported first-quarter 2024 loss of 35 cents per share, narrower than the Zacks Consensus Estimate of a loss of 64 cents. The company had incurred a loss of $1.38 per share in the year-ago quarter. Revenues increased 18.9% from the year-ago quarter’s level to $881.47 million and beat the consensus mark by 3.58%.
Growth of The Roku Channel’s streaming households and streaming hours drove first-quarter performance. Streaming households’ net additions were 1.6 million in the first quarter, taking the total to 81.6 million globally, reflecting greater engagement and more monetization opportunities.
Upward Earnings Estimate Revisions
In the past seven days, one out of nine analysts upped earnings estimates on Roku for the ongoing quarter, while as many as eight analysts took the same route over the past month. For the full-year, one analyst raised the estimate and seven did the same over the past 30 days.
The Zacks Consensus Estimate for the current quarter stands at a loss of 45 cents, narrower than a loss of 48 cents loss projected seven days ago and 57 cents loss projected a month ago. For the full year, the consensus estimate for loss has narrowed by 22 cents in the past month and by 3 cents over the past week.
Roku’s Price Target
Based on short-term price targets offered by 17 analysts, the average price target for Roku comes to $76.82. The forecasts range from a low of $52.00 to a high of $105.00. The average price target represents an increase of 28.9% from the last closing price of $59.55 (as of May 8, 2024).
Any Reason to Worry?
Some analysts have expressed concerns about Roku's future, citing ongoing losses and fierce competition in the industry. Morningstar analyst Matthew Dolgin acknowledged Roku's strong performance but remains skeptical about the stock due to its elevated customer acquisition costs and the lack of durable competitive advantages.
Morningstar analyst Matthew Dolgin offered a "no-moat" rating on Roku, per a Street.com article, as quoted on Yahoo. Other analysts, such as those at Jefferies and Wells Fargo, have also offered cautious outlooks, according to the abovementioned source.
ETFs in Focus
If you want to follow Cathie Wood but still fear the issues pointed out by Morningstar,Jefferies and Wells Fargo analysts, you can take the ETF route and play ARKK and ARKW. An ETF approach minimizes the company-specific risks to a large extent. While ROKU’s stock has seen a bloodbath this year, ARKW is in the green and ARKK has seen lesser losses.