Shares of Roku Inc. plunged Friday, putting them on track for their worst weekly performance as investors continued to express concerns about rising competition and extreme valuation.
Streaming media player's share
fell 21.1% in very active afternoon trading, and has now shed 28.5% this week. That follows a 13.1% tumble last week, bringing the two-week offering from the September 6 record of $ 169.86 to 37.9%.
Weekly sales were highlighted by Wednesday's 1
said it will start giving away its Xfinity Flex streaming media player for free to those who subscribe to the cable operator's online plans.
And last Tuesday, Roku shares fell 10.5% after Apple Inc.
unveiled the price of its Apple TV + service which was half of what was expected.
This week's decline is the biggest since Roku went public in September 2017, surpassing 24.1% tumble during the week ending November 9, 2018. Friday's sale is the second-largest one-day fall in the stock's public history, just behind the 22.3% decline on November 8, 2018 after the company's reported disappointing quarterly results.  FactSet, MarketWatch
On Friday, Pivotal Research analyst Jeff Wlodarczak sent a note to customers titled "Is Roku Broku?" As he started coverage of Roku with a seller rating and $ 60 stock price target of 43 % below today's level.
Wlodarczak said that Roku management "deserves a lot of credit" for creating a clean game over-the-top (OTT) investment in moving away from traditional cable. But despite the recent stock pullback, he believes it remains "dramatically overvalued" after a closer than quadruple rally (up 294%) this year.
"We are seeing dramatically more competition that will drive up the cost of OTTs to zero and put significant pressure on ad revenue splits, highlighted by Comcast's recent move with its free Xfinity Flex product that is likely to be copied by other distributors, "Wlodarczak wrote in a note to clients.
" While the Roku management deserves credit for the asset they have created, everyone has realized that the living room is too important and the big boys … with massive influence will probably make Roku growth much more difficult , "he wrote.
Meanwhile, most Wall Street analysts remain undulating, as the average rating of the 17 analysts surveyed by FactSet equals "overweight," and the $ 130.69 average price target is 24% above current levels.
On Friday, Oppenheimer analyst Jason Helfstein confirmed the better rating he has had on Roku over the past 14 months, while increasing his price target to $ 155 from $ 120, as he is still concerned about international expansion plans and believes Roku has a leg up on its competition.
Helfstein said that Roku's US strategy playbook should allow for "fast international market share", and the subscription for video-on-demand (SVOD) subscriptions will be a "clear headwind" as many new services play catch-up in a crowded market.
On Thursday, Roku unveiled new streaming devices, including new offers to Canada and the United Kingdom, and introduced a new Roku Express that is 10% smaller and costs less than the older model.
"We estimate that Apple +, Disney + and a mix of others (especially HBO Max) will yield $ 21 / share in combined upside," Helfstein wrote in a note to clients. "We see Roku & # 39; redeem & # 39; in their US market penetration (~ 33%), and market and sell SVOD subscriptions directly, with competition from new entrants … as of late."
He acknowledged that the stock is still "Expensive", but given the current growth and bullish secular outlook, he sees the stock move higher from today's levels.
The stock is still up 0.6% over the past three months, while Comcast shares have gained 6.5%, Apple's stock has advanced 9.5% and the S&P 500 index
has managed 1.4%.