Cathie Wood Thinks Roku Stock Can Skyrocket Over the Next 5 Years. Can It?
On July 7, Cathie Wood's Ark Invest published research about connected-TV platform company Roku (NASDAQ: ROKU), explaining why it believed the stock could reach $605 per share by 2026. This price was based on a series of assumptions Ark Invest has about Roku's underlying business.
On July 28, just three weeks later, Roku announced financial results for the second quarter of 2022, which contradicted Ark Invest's fundamental assumptions. Here's why Roku is unlikely to hit Ark Invest's lofty price target -- and why it doesn't matter for investors today.
Over long time periods, a company's stock price is correlated with its business results. This is why Ark Invest based its price target on assumptions about Roku's business. This includes how many active accounts Roku could have by 2026, how much content these accounts will stream, Roku's ad rates, profit margins, and more. In short, Ark Invest published its investment thesis for Roku.
Source Fool.com
