By Noel Randewich
SAN FRANCISCO (Reuters) - Roku Inc's (O:) high-flying stock tumbled 15% on Monday after Morgan Stanley (NYSE:) downgraded the video streaming company, warning that revenue and profit growth could slow next year.
Morgan Stanley analyst Benjamin Swinburne cut Roku to "underweight" from "equal-weight" and trimmed his price target by $10 to $110, warning of "overall exuberance over all things streaming."
The stock fell $23.50 to $136.87 shortly after midday.
A major winner in the consumer shift away from cable television in favor of Netflix (O:) and other streaming services, Roku's stock has gained more than 300% in 2019, even after Monday's slump.
Shares of the San Jose, California company, which reported a wider loss for the September quarter, are valued at an elevated 12 times revenue expected over the next 12 months, compared to a multiple of about 6 for streaming leader Netflix, according to Refinitiv.
"We believe there are risks to growth expectations not reflected in current valuation levels. Specifically, we think revenue and gross profit growth slow meaningfully in '20 and the multiple compresses," Swinburne wrote in a report.
Competition in the streaming market is increasing rapidly, with Walt Disney Co (N:) and Apple Inc (O:) launching new services last month. AT&T Inc's (N:) HBO Max and a new offering from Comcast Corp (O:) are expected to enter in 2020.
Reflecting growing competition in hardware used to deliver streaming services, Roku's stock tumbled 28% over three days in September after Comcast said it would offer internet customers a streaming media set top box for free.
Monday's drop in Roku's stock was on track to be just a bit less than the 16% sell-off from Nov. 7 after the company's quarterly report failed to satisfy investors, even after its net loss and revenue exceeded analysts' average expectations.
Also on Monday, Netflix fell 2.2%, trimming its gain in 2019 to 15%. Over last week's U.S. Thanksgiving holiday, the company began streaming its hit mobster movie "The Irishman," which JPMorgan (NYSE:) said could boost its shares.
As the streaming video market has become more crowded, Roku has shifted its focus from device sales to advertising, which is now the company's fastest-growing revenue stream.
Eleven analysts recommend buying Roku's stock, while three recommend selling and another three are neutral.
Other relevant articles
[2019-12-02 16:55:23] Forex - U.S. Dollar Stumbles After Manufacturing Decline
[2019-12-02 14:50:28] Stocks - Roku Slumps Premarket; Fiat Chrysler, Amazon Rise
[2019-11-20 15:50:07] Stocks - Wall Street Tumbles as Trade Tensions Escalate
[2019-11-15 16:45:16] U.S. retail sales rebound; manufacturing output tumbles
[2019-11-14 18:05:08] New Age Beverages Tumbles as Earnings, Revenue Miss
[2019-11-12 16:30:05] Forex- U.S. Dollar Inches Up; Chilean Peso Tumbles
[2019-11-07 21:45:09] Roku Is Not Broku Despite Slump, Wall Street Says
[2019-11-07 19:55:08] Roku tumbles 11% as Wall St. gives thumbs down to latest report
[2019-11-07 14:55:07] Stocks - Qualcomm, Nielsen Rise Premarket; Expedia, Roku Fall
[2019-11-06 23:30:16] Roku beats revenue and profit estimates
[2019-11-06 22:25:08] Roku Slumps as Softer Outlook Offsets Earnings Beat in Q3
[2019-11-06 20:45:09] Roku Earnings Preview: Strong Gains But Looming Competition Creates...
[2019-11-06 14:35:07] Stocks - CVS, Humana, HP Rise Premarket; Match Tumbles
[2019-11-05 21:45:05] Gold Finally Tumbles From $1,500 Perch on Trade-Deal Din
[2019-11-05 21:20:08] Gold Finally Tumbles From $1,500 Perch on Trade Deal Din
[2019-11-05 19:30:05] StockBeat: Roku Gets Price Upgrade Ahead of Earnings
[2019-11-05 19:25:08] StockBeat: Roku Gets Price Upgrade Ahead of Earnings
[2019-11-04 17:55:23] 5 Earnings Reports To Watch This Week: Uber, CVS, Qualcomm, Roku,...
[2019-11-04 17:30:28] Uber Tumbles After L.A. Suspends Its Electric Scooters
[2019-10-24 17:40:10] PG&E Tumbles as California Fires Spreads to its Service Area
[2019-10-23 14:55:07] Opening Bell: U.S. Futures Hit By Dire Corporate Warnings; Oil Tumbles
[2019-10-22 17:45:05] Netflix Tumbles Midday as Verizon Gives Away Disney+
[2019-10-22 17:45:05] Netflix Tumbles Midday as Verizon Gives Away Disney+
[2019-10-22 14:50:04] Stocks - Procter & Gamble, Harley-Davidson Rise Premarket; Hasbro Tumbles
[2019-10-21 13:25:23] Stocks - U.S. Futures Inch Up as Trade Chatter Continues; Boeing...
[2019-10-21 03:10:22] Asian share markets cautious, pound stumbles on Brexit drama
[2019-10-15 21:25:04] Palladium Soars to New Record, Gold Tumbles on Talk of Brexit...
[2019-10-15 21:20:04] Palladium Soars to New Record, Gold Tumbles on Talk of Brexit...
[2019-10-14 19:20:24] Oil Tumbles Again as Trade Bogeyman Returns
[2019-10-11 14:40:12] Stocks - Roku, Slack Jump, as Oil Companies Gain Premarket
[2019-10-09 19:35:09] StockBeat: Roku Jumps as Macquarie Says Users Could Triple
[2019-10-09 19:15:08] StockBeat: Roku Jumps as Macquarie Says Users Could Triple
[2019-10-09 14:50:08] Stocks - J&J Tumbles Premarket; American Outdoor Brands, Exxon Mobil Rise
[2019-10-08 22:15:05] Indexes briefly cut losses in choppy trade after Powell comments
[2019-10-08 02:55:33] Asian shares inch up in cautious mood over trade, lira stumbles
[2019-10-03 16:15:08] NewsBreak: ISM Services Index Tumbles to 3-Year Low
[2019-10-02 17:05:07] NewsBreak: Wall Street Drubbing Continues; Dow Tumbles 450
[2019-10-02 17:00:13] NewsBreak: Wall Street Drubbing Continues; Dow Tumbles 450
[2019-10-01 17:10:04] Forex - U.S. Dollar Moves Lower After ISM Data Tumbles
[2019-09-30 17:05:23] Gold Tumbles Below $1,500 as U.S. Dollar Rises
[2019-09-27 11:35:11] European Economy Stumbles as Confidence Drops to Four-Year Low
[2019-09-25 21:15:09] Gold Tumbles After 3-Day Rally; Rebound Likely
[2019-09-25 14:10:14] Opening Bell: Global Stocks Cave On Trump Impeachment Probe; Bitcoin Tumbles
[2019-09-24 14:15:04] Opening Bell: U.S. Futures Rebound On Selective Data, Trade Hopes; Oil...
[2019-09-22 09:00:25] Divided Fed Cuts Rates But Disappoints; Stumbles On Market Mechanics
[2019-09-21 23:45:16] Roku’s Big Advance May Finally Be Over
[2019-09-20 20:35:11] StockBeat: Roku Shares Clobbered as Analyst Says Sell
[2019-09-20 19:55:17] StockBeat: Roku Shares Clobbered as Analyst Says Sell
[2019-09-20 14:50:12] Stocks - Roku, General Motors Fall Premarket; Etsy Rises
[2019-09-17 22:20:05] NewsBreak: FedEx Tumbles Postmarket After Lowering Guidance
[2019-09-17 18:20:04] Oil Tumbles 5% on Report Saudi Output Might Rebound Quickly
[2019-09-16 15:50:23] Stocks - Wall Street Tumbles as Attack on Saudi Hits Oil Supply
[2019-05-20 22:15:31] Stocks - S&P Stumbles as Huawei Ban Sends Chip Stocks Spiraling...
[2019-05-20 22:10:31] Stocks - S&P Stumbles as Huawei Ban Sends Chip Stocks Spiraling...
[2019-05-20 21:30:30] Gold Rebounds as Wall Street Tumbles on Huawei, China Worries
[2019-05-16 04:20:16] Australia jobless rate jumps to eight-month highs, Australian dollar stumbles
[2019-05-10 14:40:27] Stocks - Symantec Tumbles in Premarket, GoPro, Zillow Soar, Uber on Watch
[2019-05-09 18:05:21] Roku Soars to New Highs Midday as Streaming Demand Stays Strong
[2019-05-07 11:21:36] BMW quarterly profit tumbles 78 percent, hit by 1.4 billion euro...
[2019-05-06 10:40:36] China stocks fall most in over three years on tariff threats, yuan tumbles
[2019-05-06 10:10:36] China stocks fall most in over three years on tariff threats,...
[2019-05-02 22:20:22] Stocks - Dow Stumbles on Plunge in DowDuPont, Energy Stocks
[2019-05-02 22:15:21] Stocks - Dow Stumbles on Plunge in DowDuPont, Energy Stocks
[2019-05-01 22:40:28] Stocks - S&P Tumbles as Powell Hurts Rate Cut Hopes
[2019-05-01 22:25:27] Stocks - S&P Tumbles as Powell Hurts Rate Cut Hopes
[2019-04-26 22:00:30] Oil Tumbles Most in Two Months as Trump Promises Lower Prices
[2019-04-16 19:50:21] StockBeat - UnitedHealth Tumbles After CEO Sounds Alarm on...
[2019-04-11 14:50:46] Stocks - Bed, Bath & Beyond Tumbles in Premarket, Tesla Sinks,...
[2019-03-28 11:25:16] Turkish lira tumbles 5 percent, central bank acts on swap limits
[2019-03-16 01:35:21] Dollar Stumbles, More Losses Ahead?
[2019-03-07 22:15:24] Argentinas weakened peso tumbles to record low against the dollar
[2019-03-05 14:30:12] Stocks - Target, Kohl’s, Aurora Cannabis Soar in Premarket, Hertz...
[2019-03-04 16:15:41] ECB Preview: Another High-Wire Act For Draghi As Eurozone Economy...
[2019-02-27 14:30:28] Stocks - Weight Watchers Tumbles in Premarket, Best Buy Surges,...
[2019-02-26 22:15:24] Stocks - Dow Slips as Home Depot Stumbles
[2019-02-26 22:10:25] Stocks - Dow Slips as Home Depot Stumbles
[2019-02-22 14:45:33] Stocks - Kraft Tumbles in Premarket, Tesla, Apple, Zillow Gain,...
[2019-02-21 08:10:14] Asia shares rise on U.S.-China trade deal optimism, Aussie tumbles
[2019-02-19 17:40:28] Papa John’s Stumbles Midday on Price War Worries
[2019-02-13 17:45:14] Satellite Struggles Continue as DISH Tumbles Midday
[2019-02-11 09:45:32] Forex - Dollar Edges to New 2019 High As Europe Stumbles
[2019-02-07 21:50:26] Oil Stumbles as Russia Opposes OPEC Link; US-China Summit on Hold
[2019-02-07 14:45:23] Stocks - SunTrust, Chipotle, Match Surge in Premarket, Twitter...
[2019-02-06 07:50:15] Asian shares subdued after Trump address, Aussie tumbles on RBA shift
[2019-02-04 22:30:35] Alphabet Earnings Handily Beat Estimates, but Stock Stumbles
[2019-02-04 22:05:35] Top Gainers: Ultimate Software, Roku, Papa Johns Rally
[2019-01-29 22:55:31] Stocks - Wall Street Closes Mixed as Tech Tumbles
[2019-01-29 22:25:22] Stocks - Wall Street Closes Mixed as Tech Tumbles Ahead of Apples Earnings
[2019-01-29 22:25:17] Stocks - Wall Street Closes Mixed as Tech Tumbles Ahead of...
[2019-01-29 14:40:17] Stocks - Pfizer, Verizon, PG&E Slump in Premarket, Harley...
[2019-01-18 08:05:20] Indias Sun Pharma tumbles on report of fresh allegations by whistleblower
[2019-01-14 11:15:29] Euro zone industry output tumbles in largest fall in nearly three...
[2019-01-09 11:41:04] Stocks - Wall Street Tumbles As Huawei Arrest Exacerbates Trade Fears
[2019-01-09 11:40:44] Stocks - Oracle, Boeing, Sprint Jump in Premarket; Rent-A-Center Tumbles
[2019-01-09 11:36:07] Yen soars, Aussie tumbles as fresh growth worries trigger FX flash crash
[2019-01-09 11:36:02] Pound tumbles to 20-month low after Britains May aborts Brexit vote
[2019-01-09 11:35:49] Forex - U.S. Dollar Higher While Sterling Tumbles
[2019-01-09 11:31:35] Bitcoin Tumbles 9% as Cryptos Continue to Fall
[2019-01-09 11:31:14] Political stumbles, savvy activists knock Canadas oil sector to its knees
[2019-01-08 22:40:18] Roku Tanks Midday After Citron Calls Stock Uninvestable