Why Is Everyone Talking About Roku Stock?

Roku's (NASDAQ: ROKU) stock plunged 11% on Nov. 17 after the streaming device and software company was hit by an analyst downgrade. MoffettNathanson analyst Michael Nathanson cut Roku's rating from "neutral" to "sell" and reduced his price target from $330 to $220.

In a note to investors, Nathanson said Wall Street's long-term revenue and earnings estimates for Roku were "too damn high." In order to achieve these targets, the company needed to monetize an "absurdly high portion" of its ad impressions on "long-tail" video streams -- content below the level of top-tier hits. Nathanson believes Roku's revenue growth will decelerate, and that its margins will be squeezed by higher content costs and R&D investments.

But as Roku's stock declined, Cathie Wood's ARK Invest bought 310,200 additional shares of the streaming company. As of this writing, Roku accounts for 4.92% of her flagship ARK Innovation ETF (NYSEMKT: ARKK) and 3.95% of the ARK Next Generation Internet ETF (NYSEMKT: ARKW) fund.

Source Fool.com