In this article, we discuss the 5 stocks Reddit’s WallStreetBets is buying for post-earnings gains. If you want to read our detailed analysis of these stocks, go directly to Reddit’s WallStreetBets is Buying these 10 Stocks for Post-Earnings Gains.
5. Roku, Inc. (NASDAQ: ROKU)
Number of Hedge Fund Holders: 63
Expected Earnings Date: August 4 (After Market Close)
Roku, Inc. (NASDAQ: ROKU) is placed fifth on our list of 10 stocks Reddit’s WallStreetBets is buying for post-earnings gains. The firm is based in California and operates a TV streaming platform. The firm is expected to release earnings results for the second quarter after the close of market on August 4. The stock has been trending on social media platforms recently and jumped more than 12% in a single day of trading on July 23 amid solid options and bullish options activity. The firm has a market cap of more than $56 billion.
On July 7, investment advisory Morgan Stanley kept an Underweight rating on Roku, Inc. (NASDAQ: ROKU) stock but raised the price target to $325 from $300, noting that the US ad market was the strongest it had been in decades and Roku would benefit from it.
At the end of the first quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $3.7 billion in Roku, Inc. (NASDAQ: ROKU), up from 60 in the preceding quarter worth $3.2 billion.
In its Q4 2020 investor letter, RGA Investment Advisors, an asset management firm, highlighted a few stocks and Roku, Inc. (NASDAQ: ROKU) was one of them. Here is what the fund said:
“For two years running, Roku has now been either the largest or second largest driver of performance in portfolios. When we purchased Roku, obviously we never expected such a phenomenal outcome, so quickly—these things can only be chalked up to luck. However, we do think luck is the residue of design and Roku had all the hallmarks ex ante as the kind of position that could do something wildly spectacular. One of the first signs in seeing Roku’s potential was the sharp contrast between our modeled expectations for the top line of the business and where the consensus expectations were. This was the Shopify setup all over again. By this time, we had added an additional tool to our analytical framework, and this helped further enforce our conviction that not only was it we who were right about where things should go, but also that the very existence of this gap could be a potent source of fuel behind the stock as the world came around to our expectation. Specifically, we had become increasingly comfortable building lifetime value analyses of companies, and notably, when we bought Roku, we were quite confident that with only modest annual increases in average revenue per user (ARPU), and a 5-year average customer lifespan, we were buying the company for its existing customer base and nothing more. In other words, the growth at Roku was entirely free at the prevailing prices we bought into.”
