Red-Hot Roku Stock Aiming to Finish Strong

ROKU has doubled in value year-to-date

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Streaming staple Roku, Inc. (NASDAQ:ROKU) is used in North America, Latin America and throughout Europe. The company’s primary goal is to provide advertisers with a flexible streaming platform to run services such as Disney+, Netflix, and Amazon Prime.

Roku recently announced the hiring of former Chief Architect of Siri at Apple, Brian Pinkerton, as Senior Vice President of Advanced Development. The move signals hopes of advancing the company’s technical innovation and strategic software development.

Roku stock has doubled in value in 2020 and more than quadrupled off 52-week low of $58.22 in March. The shares' 45% monthly gain for November culminated in a record high of $293.65 on Monday. And for the past two weeks, a floor and bull flag pattern appears to be emerging just above the $270 level.


ROKU Stock Chart

It’s certainly a good time for contrarians to weigh in, considering the equity’s Schaeffer’s put/call open interest ratio (SOIR) of 1.25, which sits three percentage points from an annual high. This means short-term options traders have rarely been more put-biased in the past 12 months.

Options are an intriguing route, considering the stock’s Schaeffer’s Volatility Index (SVI) of 49% sits higher than just 15% of all other annual readings, meaning options traders are pricing in relatively low volatility expectations at the moment.

Overall, Roku’s numbers are impressive, despite the company’s current lack of profitability. Roku’s advertiser-friendly business model has allowed the company to grow revenue exponentially over the years. Roku also has a great balance sheet, with over $1 billion in cash. The company's cash is more than double the $439 million in debt being carried. In addition, as traditional entertainment continues to be left in the dust by streaming and cloud services, Roku looks set to reap a lot of the benefits of this ongoing change. Stay-at-home stocks seem to be parking on top of going-out stocks for the foreseeable future.

 

 

 

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