Down 80% in This Bear Market, Can Roku Recover in 2023?
Shares of Roku (NASDAQ: ROKU) are down 79.8% since the S&P 500 index peaked on Jan. 3, 2022, according to data from S&P Global Market Intelligence. The media-streaming technology expert saw share prices fall in every month except November, which broke the downtrend with a modest 6.9% uptick. Otherwise, I'm looking at double-digit percentages in eight different months, led by particularly sharp drops in January and December.
Let's start from the top. Roku's price drop actually started way back in July 2021, as growth investing phenom Cathie Wood disclosed that her ARK Innovation fund had sold roughly 500,000 Roku shares. It's all downhill after that, because many Roku investors seem to have lost conviction in this investment then and there.
More specifically, January's 28.1% price cut started with macroeconomic concerns and accelerated when analysts poured fuel on the bearish fires. The stock was trading at a double-digit price-to-sales ratio and triple-digit price-to-earnings ratio at the time. It made some sense to call Roku shares overvalued under those circumstances. By the end of the month, the P/S ratio had dropped to 8.4, and shares were changing hands at 96 times adjusted earnings.
Source Fool.com
