From streaming adulation for the Roku (NASDAQ:ROKU) platform to screaming investors in ROKU stock, is now the time to purchase shares? Let’s examine what’s going on off and on the price chart to reach a more well-informed investment decision.
What a week it was for over-the-top device giant ROKU. And it wouldn’t be hard to think that many Roku stock bulls are wishing they could hit rewind on the platform of choice for streaming video entertainment ranging from Netflix (NASDAQ:NFLX), Hulu, Prime from Amazon (NASDAQ:AMZN) or Disney’s (NYSE:DIS) ESPN+.
In brief, ROKU shares took a hit of around 27% in the wake of a one-two punch from Comcast (NASDAQ:CMCSA), which announced its Xfinity streaming media player will be free to internet-only subscribers. In addition, a bearish analyst call from Pivotal Research asked the question, “Is Roku Broku?”
Along with Roku’s lofty valuation and what the firm sees as a worsening margin environment for the kingpin already reeling from the prior week’s aggressively-priced Apple TV+ news, Pivotal Research began coverage of ROKU with a sell rating and price target of $60 on Friday.
But don’t feel too bad for longtime Roku stock bulls. And don’t count them out on the price chart either, at least not yet.
ROKU Stock Price Weekly Chart
Despite a punishing week for ROKU, shares are still up about 260% in 2019. As much, it would be difficult to feel bad for longer-term Roku bulls. Also, the fact is growth stocks routinely correct after swinging too strong, market-leading returns, no matter how good a company’s prospects might seem.
The other fact is, there were signs already in place on the Roku stock price chart which stressed a timelier exit, or cutting down exposure to ROKU and locking in profits. I personally warned of Roku’s challenging circumstances immediately in front of last week’s vicious or what some might call “over-the-top” selling pressure. And I still wouldn’t advise buying ROKU just yet.
Despite ROKU’s healthy and much-needed correction of 41% from its recent all-time-high, shares are sandwiched in between Fibonacci and trend-line support zones. That’s generally viewed as no-man’s land as far as buying. I’d prefer the next area of support from approximately $96 – $102 is tested before considering a purchase.
In truth of course, price action isn’t always so accommodating. ROKU may not test ‘my zone.’ Shares could trade higher from here or continue to plummet.
Nevertheless, the last fact to be respectful of is Roku’s weekly stochastics. Coupled with a setup which is still pointed down and positioned for price weakness, the current low in ROKU stock price doesn’t look like a bottom—or at least not a buyable one just yet.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits
