Roku’s (NASDAQ:ROKU) plunge from a $176.55 high is a reminder to momentum investors that all good things come to an end. Roku shares continued a month-long rally following its quarterly earnings report. At the time, markets ignored the competition ahead and thought subscription growth would justify the valuations.
When Apple (NASDAQ:AAPL) announced Apple Plus streaming service, the incredibly low price will certainly pressure Roku. Existing Apple device users will likely sign up for the service. And if they own a Roku TV or device and pay for a service, they will probably discontinue it.
Netflix (NASDAQ:NFLX) continues to pressure Roku because of the high-quality original content that it creates for its growing customer base. Even Facebook (NASDAQ:FB) may get into the streaming game. It reportedly approached Netflix and Disney about their inclusion in its Portal device.
The reality is that Facebook failed to extend its growth beyond social networking, Instagram, and WhatsApp. VR failed and so will its streaming services ambitions.
Looking ahead, Roku has new streaming devices that are smaller and support 4K. In time for the holiday period, the device starts as low as just $29.99. The more powerful models have more memory and power (quad-core processor).
Roku’s stock was due for a breather. The company has strong prospects, so investors should watch the stock as selling pressure eases.
Tech Insider
