Roku, the big OTT set-top-box/technology company, saw its stock go up sharply on Friday, as a result of a positive research report that mulled the idea of a possible acquisition by Netflix.
In a report on Friday, Citron Research changed its position on Roku to a positive long-term buy from a “short” recommendation.
“The OTT movement has become a mega-trend that cannot be ignored, and the numbers around Roku have completely changed since our November 29 tweet.” Roku’s stock rocketed up to $50 in November from its IPO price of $14.
But now Citron says: “Roku is trading at the largest discount ever to OTT peers, despite being the only OTT pure play that generates ad revenue.”
The report also mulled the possibility of a Netflix acquisition, which would extend the big subscription VOD platform’s revenue base with a separate advertising-business.
Roku sells advertising avails on hundreds of TV networks. It has 21 million accounts.
Citron Research said: “With the recent surge in Netflix stock, Netflix could look toward advertising to generate new revenue and could easily acquire Roku.”
Netflix executives have long dismissed TV analysts expectations it would create a TV ad-based business to diversify its revenue growth -- one in which it would sell TV commercials around its produced or acquired TV and/or film content.
Roku stock closed up 7.1% to $38.54 on Friday; Netflix inched up 0.6% to $351.29.