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Roku Dips Again: Stock Down 100 Points Since Feb. 1 Despite Record Q4

Roku
(Image credit: Future)

The most volatile stock in the media-technology business is back in free fall. 

And we're not talking about ViacomCBS.

Roku, which ascended to the lofty heights in early February of a $395 share price and a market capitalization exceeding $50 billion, dipped to $295 a share as of late-day Friday Nasdaq trading, and a market cap of around $38 billion.

Roku declined more than 6% in Friday trading before a late-day rally started. 

In early March, celebrity equity analyst Craig Moffett sent Roku shares down when he revised his price target from $410 to $360. The company, which is ambitiously branching out into original programming, might be biting off a lot to chew, and it may be a bit overvalued, Moffett suggested.  

But for Roku, which has seen wild fluctuations before in its Wall Street valuation since it went public in late 2017, it’s tough to pinpoint a performance metric that can justify around $15 billion of wealth disappearing, seemingly overnight. 

On Feb. 18, Roku reported that it finished the last three months of 2020 with a record $649.9 million of total revenue, up 58% year over year.

Roku also saw a 58% revenue bump for the full pandemic year, taking in $1.778 billion. That surpassed the $1.6 billion guidance the company stated at the beginning of 2020.

Roku reported a $65.2 million net profit for the quarter--Wall Street had expected a loss. And its active user count keeps surging, surpassing 51 million in Q4.

Also in early March, Roku purchased Nielsen’s advanced advertising business, prompting LightShed Partners’ Rich Greenfield to ponder whether the company was set to “devour the TV ad market.”

Roku has seen volatility before—in fact, Next TV tried to drill down on the company’s price fluctuations in this May 2020 story. 

This time around, the Los Gatos, Calif.-based media-tech giant, which is now arming up for the expensive original content arms race, might just be a little over-heated.

Even after its boffo Q4 earnings call, some analysts expressed caution … and concern over a stock price exceeding $400 a share.

"Looking forward with interest rates rising materially and still arguably cheap economic rebound plays out there, we believe the broad outlook for tech is at least temporarily weakening,” Pivotal Research Group analyst Jeffrey Wlodarczak wrote at the time. “While Roku has a very solid backdrop/outlook it is unquestionably expensive.”