Roku stock drops 11% after underweight analyst recommendation

Roku $Roku Inc (ROKU.US)$ shares dropped more than 11.7% on Wednesday amid an Underweight initiation by Atlantic Equities over concerns of slowing growth and weak penetration in markets abroad.

"We estimate that 80% of Roku's active accounts are located in the U.S., implying 34% penetration in that market and just 6% in the other markets in which it operates," analyst Hamilton Faber wrote in a note to investors. The streaming device company's international markets include Canada, Mexico, Brazil, the UK, France, and several other Latin American countries.

The analyst expects U.S. annual additions to ease with overall global adds for the next four years "meaningfully below consensus of 10.5m million."

The analyst set a price target of $136 per share, which implies a downside of more than 30% from current levels.

The stock accelerated its losses during the afternoon session on Wednesday amid a broader tech sell-off over concerns of Fed rate hikes.

Part of the content is taken from Yahoo.