(Bloomberg) -- Roku shares fell for a second straight session on Thursday as investors continued to fret over the risk of growing competition for the video-streaming platform, including from two of the biggest names on Wall Street.
Shares fell as much as 6.3 percent, building on a drop of 2.9 percent in the previous session. Despite the recent losses, shares remain up nearly 140 percent from a December low.
Guggenheim downgraded Roku to neutral from buy on Thursday. Analyst Michael Morris wrote that “Amazon's and Viacom's greater pushes into advertising video on demand (AVOD) are increasing competition.” He added that Apple's recently-announced video service “represents an additional risk to Roku's active user base,” even though the platform includes The Roku Channel.
The downgrade comes one day after Cheddar reported that Amazon was planning an expansion of the free streaming service on its Fire TV devices.
Rosenblatt Securities analyst Mark Zgutowicz on Thursday wrote that Amazon represented a formidable potential competitor for Roku.
“Amazon has deep pockets to license potentially more ‘premium-like' content relative to the Roku Channel library,” he wrote in an email. Roku's channel “will never garner enough sticky/frequent viewership to scale because of its low content value.” He added that Amazon can offer “the highest quality data set for a programmer to leverage with advertisers,” data that they wouldn't get from Roku.
To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm
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