The catalyst some investors are citing is Facebook, Inc. (NASDAQ: FB)'s announcement of its Portal TV product and Comcast Corporation (NASDAQ: CMCSA)'s new promotional offering of a streaming media set top box for free to internet-only customers.
Facebook's New Hardware
Facebook's new Portal TV hardware allows users to make video calls directly from a TV, CNBC's Sal Rodriguez reported.
The hardware will also support video streaming of certain services, including Amazon Prime video, among others.
Other features include the ability for all parties to stream video in unison and play augmented reality games, according to CNBC. The social media company will face "stiff competition," especially for streaming video, Rodriguez said.
Comcast's 'Biggest' Move For Cord Cutters
Comcast's new marketing initiative represents the company's "biggest move" to attract cord-cutters, CNBC's Julia Boorstin reported. The offer of a free top-set box is meant to target users who may have once subscribed to a TV package, but now only pay for internet at home.
This puts Comcast in direct competition with a company like Roku, which would explain the notable move in the stock to the downside, she said.
Needham Analyst: Here's The Problem With Netflix
Comcast's new initiative gives consumers another option with a the margin price for streaming content of zero, Needham analyst Laura Martin said on CNBC's "Squawk Alley" Wednesday.
Comcast will now offer consumers a free device, while new streaming platforms like Walt Disney Co (NYSE: DIS)'s cost as little as $3 per month.
The abundance of free or very cheap options calls into question how a company like Netflix Inc (NASDAQ: NFLX) can sell a $13-$15 per month package, the analyst said. Netflix "has to" launch a much cheaper advertising-supported package, she said.
Roku shares were down 14.2% at the time of publication, while Netflix shares were 3.42% lower.
Facebook's Portal TV Gives Roku Investors Pause
Guggenheim: Roku Growth Story Has More Fuel
Photo courtesy of Netflix.
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