ARK Invest CEO Cathie Wood has never shied away from bold predictions. In February 2018, she put a $4,000 per-share price target on Tesla stock. That was before the split, but that price target implied a market cap of $720 billion. That prediction turned heads on Wall Street because Tesla was worth just $60 billion at the time. Not many analysts swing for the fences like that.
In hindsight, it appears Wood made the right call. Tesla is currently valued at $810 billion, and its market cap actually surpassed $1.2 trillion last year. The relative accuracy of the call has some investors wondering about another bold valuation model that ARK Invest recently published. This new report puts Roku (ROKU -23.07%)stock at $605 per share by 2026, implying an 850% upside.
Does Cathie Wood’s prediction make Roku stock a buy?
Roku is the most popular streaming platform
In 2008, Roku made history when it introduced the first streaming device. The company has since parlayed its first-mover status into a strong market position. Today, it is the leading streaming platform in the U.S., Canada, and Mexico as measured by viewing time. In fact, the company holds such a dominant position in those markets that its platform powered 31% of global streaming time in the first quarter, nearly double the market share held by the next closest competitor.
Roku owes much of that success to Roku OS, the only operating system purpose-built for televisions. Other platforms employ modified mobile operating systems, which makes for a less enjoyable viewer experience. For instance, Roku saw fewer video-start failures than any competitor in the first quarter, and it tied for the lowest buffering rate.
As a caveat, Roku is currently battling several headwinds that have blunted growth. Revenue rose just 18% in the last quarter, and the company posted a GAAP loss of $0.82 per diluted share, down from a profit of $0.52 per diluted share in the prior year. Those disappointing results reflect the impact of a tough macroeconomic environment. Consumer spending is under pressure and advertisers are cutting budgets, but those headwinds should ease as inflation normalizes.
Turning to the future, the company sits in front of a massive market opportunity. Global digital ad spend is expected to hit $820 billion by 2025, and $259 billion of that total will go toward ad-supported video services, according to Omdia. Roku, as the most popular streaming platform, is well positioned to take advantage of that.
As a caveat, investors should monitor growth in active accounts and streaming hours to make sure Roku stays on the right track, and Cathie Wood’s price target might be ambitious. But with shares trading at 3 times sales — the cheapest valuation in the past three years — now is a great time to buy this growth stock
Read Next – Gold is about to SOAR – here’s what to do
As you read this, everything is lining up perfectly for a historic gold bull run.
- Gold recently climbed past $1,800/oz…
- Market uncertainty is high, with inflation worries causing many investors to scramble for safe havens…
- There’s no clear consensus on what the Fed will do to rates in 2023…
- And many commodity experts are raising their price target for gold.
Bottom line: NOW is the time you want to own gold!
Our research leads us to believe that we could see gold reach as high as $3,000 by the end of 2023… possibly higher.
Which makes why we’re reaching out to you today all the more urgent.
You see, we just put together a special presentation about our No. 1 pick for this current gold bull run.
It has more potential upside and substantially less risk than ANY other gold strategy we’ve ever seen…
In the past, folks investing in this same gold strategy could have been able to make nearly 50X their initial investment!
And today, you can take advantage of a similar situation for less than $10.
We’ve put together a detailed presentation (free) to show you exactly how this strategy works… and why it could lead to some of the biggest gains you’ll ever see from gold.
Considering how quickly the price of gold can move, you don’t want to waste any time missing out on the potential profits that I now see directly in front of us.
You can get all the details today right here.
