On Feb. 13, connected TV platform company (NASDAQ: ROKU) shed hundreds of millions from its market capitalization following a report that retail giant Walmart (NYSE: WMT) is trying to buy TV manufacturer Vizio (NYSE: VZIO) for $2 billion. Based on the market's knee-jerk reaction to this news, investors are clearly worried about the competitive threat for Roku.

A week later, Walmart officially announced its deal to acquire Vizio for $2.3 billion. Roku stock dropped again on the news.

There may be good reason for investors' concern. Roku generates revenue in two main ways: device sales and platform revenue. On the hardware side of things, Roku sells smart TVs and accessories with streaming capabilities. Last year, Walmart was a top-three retailer for Roku's devices.

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Source Fool.com