Down 52%, Is Roku Stock a Smart Buy Now?
A few factors have contributed to the recent bout of market volatility, including concerns about rising inflation and changes to the Federal Reserve's monetary policy. Specifically, rising prices often lead central banks to boost benchmark interest rates, and the Federal Open Market Committee this week signaled that we could see three 0.25% fed funds rate hikes in 2022. As recently as September, half of its members were forecasting one or two such hikes next year, while the other half expected none.
Not surprisingly, in light of these conditions, growth stocks have been hammered on Wall Street. Rising interest rates make it more costly to borrow money, and high-growth companies need capital to fund their expansion efforts. Additionally, growth stocks are often valued based on their expected future cash flows, and rising interest rates reduce the present value of future money.
In the case of entertainment technology developer Roku (NASDAQ: ROKU), the macroeconomic headwinds have intensified Wall Street's concerns regarding its deceleration in end-user engagement. As a result, the stock has fallen sharply over the last few months, and it currently trades 52% below its all-time high. But with that plunge behind it, is this a good time to buy a few shares of Roku?
Source Fool.com
