He rallied late, but Roku stock was still down 23% in March
Actions of Roku (NASDAQ: ROKU) ended March down 23%, according to data provided by S&P Global Market Intelligence. However, as bad as the month was, at one point the stock fell 43% as the COVID-19-induced bear market reached a phase of total panic.
Roku’s stock regained some ground, but not before a mystery was solved. On March 17, a report surfaced that somebody was selling a 6 million stock stake in the company, briefly giving shareholders nervousness.
The mystery seller turned out to be Fox. The company had a 5% stake in Roku which it wanted to get rid of. Now when someone with this a large stake is sold all at once, this can be a major red flag for other shareholders. After all, who would possibly have the scoop on Roku’s future and viability than a 5% shareholder?
As it turns out, Fox didn’t necessarily sell because he lost faith in Roku. It was rather the cash to acquire Tubi – a streaming company. This news appears to have completely changed the attitude of investors towards Roku shares. From then until the end of March, Roku shares rose 30%, beating the S&P 500 Index over this brief period.
In bear markets, it is not uncommon for hot growth stocks like Roku to fall harder than the market average. So maybe some aren’t surprised to see the stock crash in March after his run of 337% in 2019. But I think recent rally buyers are right. Roku’s transformation from a simple hardware maker to an operating system platform drove revenue growth and made it worthy of the overwhelming market performance of 2019.
The news released on the last day of March is a good reminder that this growth story has even more unwritten chapters. Roku has just announced new features to its operating system to support its growth initiatives, including the ability to voice command in Spanish. Almost all of the $ 1.1 billion in revenue generated by Roku for 2019 came from the United States.
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