On Tuesday, Roku Inc. (NASDAQ:ROKU) shares edged lower despite announcingRoku shares edged slightly lower on Tuesday despite adding 17 new linear channels to its line-up for a total of more than 200. So is it time to invest in ROKU shares? an expansion of its channel offering. The company added 17 new linear channels to its line-up for a total of more than 200 channels.
Ashley Hovey, Director of The Roku Channel AVOD said:
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We’ve seen linear streaming explode over the last year and we’re very excited to offer an all-new lineup of great channels with some of the most-recognized franchises to our users.
Some of the newly added streaming channels include CBC News, Baywatch, IGN, Real Madrid TV.
The company has been expanding its offerings recently to capture a rapidly growing market in the video streaming industry. In June, it added the Apple TV+ button to the Roku TV remote in addition to Netflix, Disney+ and Hulu, bringing the total number of streaming services to four.
Should you buy Roku shares in Q3 2021?
From a valuation perspective, Roku shares trade at a steep P/E ratio of 210.40. Moreover, the forward P/E ratio is slightly higher at 236.30, implying a potential slowdown in earnings per share over the next 12 months.
Analysts expect Roku’s EPS to grow by 78% this year before rising 21.30% next year. Therefore, the stock could still appeal to growth investors willing to overlook the short-term turbulence. Furthermore, the company’s recent developments in adding the Apple+ TV button to its remote and expanding linear streaming channel offerings could boost long-term growth.
Technical overview: Roku stock price forecast for August 2021
Technically, Roku shares have recently plunged to trade closer to the oversold levels of the 14-day RSI. Moreover, the stock price has also dropped below the 100-day moving average after completing a downward breakout from an ascending channel formation.
Therefore, as the stock price approaches oversold conditions, investors will target potential rebounds at approximately $389.21 or higher at $424.63. On the other hand, if the downward movement continues, it could find support at $325.06 or lower at $289.47.
Bottom line: the case for buying Roku shares in Q3 2021
In summary, although Roku shares trade at steep P/E ratios, analysts expect earnings to grow significantly this year. Furthermore, the recent plunge in the stock price has pushed it closer to oversold conditions, creating the perfect opportunity for a rebound.
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