Roku Expands Advertising Business to Mexico; Shares Fall

TV streaming services provider Roku, Inc. (NASDAQ: ROKU) has launched its advertising business in Mexico in partnership with California-based digital marketing and media company Entravision Communications Corp. (NYSE: EVC).

Mirjam Laux, the Vice-President of International Platform at Roku, said, “Our goal is to help advertisers and content partners invest for a world where all TV and all TV ads will be streamed. We look forward to working directly with brands and content providers to reach even more consumers through TV streaming in Mexico.”

Entravision will serve as Roku’s advertising partner in Mexico to help interested brands advertise on the Roku platform.

ROKU stock closed 5.6% down on Wednesday. It lost another 4.9% in after-hours trading to end the day at $149.20.

Wall Street’s Take

Last month, Citigroup (NYSE: C) analyst Jason Bazinet maintained a Buy rating on the stock but lowered the price target to $275 from $410 (75.3% upside potential).

In a research note to investors, Bazinet said, “Subscriber-based stocks have come under significant pressure and the equity returns now lag the S&P 500 Index since January 2020.”

Additionally, Michael Morris of Guggenheim reiterated a Buy rating on Roku and reduced the price target from $370 to $210 (33.8% upside potential).

Guggenheim said, “We have revised our ROKU model to align with recently updated digital advertising forecast assumptions and to better reflect our expectation that supply chain issues within the domestic smart TV market are persisting.”

“Our 4Q active account add estimate is now 2 million versus our prior 2.5 million, and we have lowered our 2022 and 2023 estimates by 1.1 million each,” the analyst added.

Overall, the stock has a Moderate Buy consensus rating based on 17 Buys, 2 Holds and 3 Sells. The average Roku stock forecast of $323.76 implies 106.4% upside potential. Shares have lost 63.5% over the past six months.

ROKU stock earnings for the fourth quarter of 2021 are scheduled to be released on February 24.

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