Shares of Roku, Inc. ended the Wednesday session with a sharp loss as heightened competition dimmed its growth prospects.
The digital media player manufacturer plunged 11.72% or 26.12 points to $196.71 per share, the lowest since October 2020.
The firm slightly reversed its drop as it gained 1.16% or 2.28 points to $198.99 per share in the after-hours market.
Accordingly, the stock price currently faces a downtrend as it weakened 42.64% or 146.24 points from the past year.
Nevertheless, it is still considered one of the leading media stocks globally, with a market capitalization of $26.43 billion.
However, Atlantic Equities, a respected British investment bank, gave Roku an underweight (sell) rating.
The brokerage company took a bearish outlook as they forecasted that the growth of the streaming pioneer will slow down by 2025.
Consequently, Atlantic placed its coverage of Roku at a price target of $136.00.
This latest projection reflects a potential loss of 39.00% over the coming year, compared with the stock’s Tuesday closing price.
Analysts further cited Roku’s growth outside the United States progressed significantly slower. Hence, it will not compensate for the sluggish performance at its home market.
Amazon, Google Stunts Roku’s User Growth
Roku now faces tighter competition in the streaming stick market as it battles with heavyweights Google and Amazon.
Last Wednesday, Amazon reported more than 150.00 million sold Fire TV devices.
Meanwhile, Roku posted lower figures as it operates through 56.00 million active accounts.
Additionally, Atlantic noted South Korean tech giant Samsung as a stiff competitor for the California-based firm.
The investment bank explained that Roku’s long-term growth requires new user accounts. The streaming company presently sells hardware and licenses software to TV makers.
Then, a considerable part of its profit came from advertising within streaming content delivered through its platform.
The business must obtain more active accounts to serve as gatekeepers and take a larger share of TV advertising.
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