11 Best AdTech Stocks to Buy According to Hedge Funds

2) Roku, Inc. (NASDAQ:ROKU)

Number of Hedge Fund Holders: 40

Roku, Inc. (NASDAQ:ROKU) mainly operates as a television streaming platform. Apart from connecting consumers to streamlining content, the company also allows advertisers to engage customers and content publishers to build and monetize large audiences.

The shares of Roku, Inc. (NASDAQ:ROKU) saw the impact of the media report stating that the digital advertising firm, The Trade Desk, Inc. (NASDAQ:TTD), plans to launch a connected TV operating system by H2 2025. The system, Ventura, will enter a domain that is currently being led by platforms such as Roku, Inc. (NASDAQ:ROKU), Amazon Fire TV, and Google TV. Therefore, market fears emerged that Ventura might impact the dominance of Roku and other players by providing manufacturers and advertisers a neutral alternative to current existing systems.

However, market players believe that the tides are now turning, and Roku, Inc. (NASDAQ:ROKU) is well-placed to revive over the upcoming quarters. First off, the current Q4 is expected to benefit the company from generous political ad spending. Also, the fresh ad-buying partnership with The Trade Desk, Inc. (NASDAQ:TTD) and marketing push for Roku’s own products and services should drive growth for Roku, Inc. (NASDAQ:ROKU).

The collaboration with The Trade Desk, Inc. (NASDAQ:TTD) to enhance the TV streaming advertising experience focuses on providing advertisers with improved tools for planning, purchasing, and measuring ad campaigns. This partnership will leverage Roku’s data capabilities, such as automatic content recognition.

O’keefe Stevens Advisory, an investment advisory firm, released its Q1 2024 investor letter. Here is what the fund said:

“Roku, Inc. (NASDAQ:ROKU) – An idea that would have seemed unthinkable just a few years back when low P/E or low multiple meant the stock was cheap. Roku is free-cash-flow positive, EBITDA breakeven, and GAAP Net Income unprofitable. Historically, investors tend to shy away from unprofitable businesses. Deeming them too risky. Roku has a $2B net cash position and is reinvesting in the business, grabbing Connected TV market share. Geographic expansion takes time and capital. They have a dominant share and have many tailwinds. Walmart’s acquisition of Vizio adds to the already heightened uncertainty. We can’t remember seeing a company with such “negative” sell-side coverage. 9 buys, 10 holds, and 4 sells. Nearly all reports discuss weighting for clarity, which is why the opportunity exists. Wells Fargo has the lowest price target at $45, or 26% downside. We see a reasonable case for a $100 stock in the near term and long term, owning a compounder with an attractive business model, secular tailwinds, and dominant market share that can translate into a desirable return over the next several years.”