Roku stock is a ‘fundamental short’ at current valuation: Analyst

According to a senior analyst at Pivotal Research Group, the recent increase in Roku Inc. (NASDAQ: ROKU) is not supported by "fundamentals" and is therefore unlikely to be sustained.

On Monday, Jeff Wlodarczak lowered Roku stock to "sell" and set a $60 price objective, which would be a 30% decline from the current price.

All ad-facing businesses are being impacted by a slowdown in advertising due to the recession, but Roku in particular seems to be feeling the effects the most, he added.

The sole positive aspect of Roku's Q2 report, which was released late last month, was that it added 1.8 million active accounts as opposed to the 0.8 million anticipated.

Apart from that, almost everything missed estimates, including future advice.

As the streaming market continues to become more competitive, Wlodarczak is confident that the Nasdaq-listed company will gradually lose market share.

Streaming is a significant, long-term expanding business, so if Roku falters for the next nine to twelve months, other, well-capitalized players will have a chance to gain market share.

He worries that Roku may not have enough room to increase its market share in the United States and Canada.