Roku Rises After Citron's Left Makes U-turn, Goes Long
Andrew Left has reversed course on Roku (ROKU), a name he had previously recommended shorting, sending the stock higher in morning trading. Where previously the Citron Research front man was worried about valuation, he now points to the rally in Netflix (NFLX) as a reason to reconsider that stance and believes the over-the-top, or OTT, viewing "megatrend" can no longer be ignored.
New Citron report
In a new report published to Citron's website earlier today, Left noted that Citron previously had called Roku's stock price "a joke" and predicted the shares would trade back to $28. Roku subsequently traded back to $29 and bounced, said Left, who added that the "OTT movement has become a megatrend that cannot be ignored and the numbers around Roku have completely changed since our November 29 tweet."
Citron said that Roku is now trading at its "largest discount ever to OTT peers despite being the only OTT pure play that generates ad revenue" and re-evaluating Disney's (DIS) acquisition of DTC streaming service BAMTech with Roku's current subscriber base implies Roku "could be worth about 3x its current value."
Left also said the rally in Netflix's share price since November has forced him to reevaluate, adding that Roku's short interest is four times that of Netflix and "shorts have to know when they overstay their welcome."
Price action
In late morning trading, Roku has risen $1.76, or 4.9%, to $37.78 per share.
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