Roku slips as Pivotal downgrades, citing valuation, deteriorating economic conditions
Justin Sullivan

Roku (NASDAQ:ROKU) shares slipped on Monday as investment firm Pivotal Research downgraded the connected television company, citing the recent run-up in the stock after its second-quarter results and the continued decline in the global economy.
Analyst Jeffrey Wlodarczak lowered his rating on Roku (ROKU) shares to sell from hold, but kept the firm's $60 price target, noting that a so-called "soft landing" from the Federal Reserve is a long short as inflation stays higher for longer, which is likely to hurt Roku (ROKU) at its current valuation. 
Wlodarczak noted that aside from its valuation, Roku (ROKU) looks as if it is being hit "materially harder" than its peers, due in part to the negative effects of rising interest rates, which are likely to continue to rise into the first half of 2023. Additionally, there are concerns that the economy will continue to get worse and could do so into the first-half of next year.
Roku (ROKU) is also ramping up spending, sales and marketing and other expenses, despite the fact it may be entering "a likely extended period of a challenging revenue growth," Wlodarczak pointed out.
Roku (ROKU) shares fell 2.5% to $80.18 in premarket trading. 
It's also possible that Roku (ROKU) may have "fully penetrated" its core U.S. and Canada market, as evidenced by Netflix'd (NFLX) continued weak results in the area.
Lastly, with Roku (ROKU) on the defensive, other, well-capitalized entrants into the market could take advantage, resulting in a smaller market share for the Anthony Wood-led Roku (ROKU).
Earlier this month, Paramount+ (PARA) (PARAA) became a part of The Roku Channel's (ROKU) lineup of premium subscriptions. 
Analysts are exceedingly varied on Roku (ROKU). It had an average rating of HOLD from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates ROKU a STRONG SELL.