Since its initial public offering on Sept. 27, streaming device company Roku Inc. (NASDAQ: ROKU) has surged 97%, making it the best tech IPO of the year. But it's also one of the most volatile.
On Monday, shares of Roku soared 17% and closed at a record high after boutique research shop Needham upped its price target to $50, citing the streaming company's growing customer base. Massive moves are nothing new to Roku shareholders, particularly as of late as investors struggle to value the company.
But Matt Maley, equity strategist at Miller Tabak, says that such moves are to be expected, and that investors shouldn't be too concerned with any pullbacks in the short term.
"The one thing we need to know is companies like this have such good upside potential in terms of their business," he told the media on Monday.
"(However), 12%, 20% corrections are going to happen all the time."
Since going public, Roku shares have registered daily moves of 18%, 28% and 55%.
Max Wolff, chief economist at The Phoenix Group, believes however that while "over-the-top looks like it's the future," Roku could soon face competition from some other big tech names that could enter the space.
Needham claims that efforts from other companies, such as Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ: GOOGL), to create original content only benefits Roku Inc. This is because the set-top box acts as a way to stream this content without having to puts its own funds at risk making it.
Tuesday found ROKU stock up $3.87, or 8.3%, to $50.39.
