- Roku's stock has once again given up most of its recent gains, which is becoming normal for them.
- There is still plenty of upside potential, with analysts' new price target at 90%.
- It's difficult to buy a stock that's falling when other stocks are falling, but it can be your biggest opportunity.
A 30% drop from pre-earnings stock prices should tell you everything you need to know about Roku (NASDAQ:)'s earnings report. The streaming giant released fourth-quarter numbers last week, managing to outperform sales and share decent forward guidance, but investors didn't hesitate to walk away.
For Roku investors, this will be a tough pill to swallow. Because it's almost impossible to ask for more from an earnings report than improved earnings and better-than-expected forward guidance. However, the stock is up more than 70% from its October lows, and it appears to be a case of buying the rumors and selling the news.
This week's decline is just the latest chapter in Roku's increasingly volatile stock performance. After falling 90% from its 2021 high, the stock has been on a slow but steady upward trend since bottoming out in late 2022. I slowly but surely observed that every time a 100% profit was recorded, he was immediately followed by multiple 50% haircuts.
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But is this just the latest move in an emerging bull market? Roku stock has consistently made new highs and even higher lows, despite steep declines. Let's take this week as an example. Despite giving up nearly all of its gains since October, the stock is still above its October low, above its May low, and above its previous December low. Roku has shown time and time again that it's resilient to even the most bearish of worst-case scenarios, so I can't help but wonder if there's an opportunity for entry opening up here.
This has been a topic that several leading analysts have covered extensively in recent days. Take Stevens' team, for example, which reiterated its Overweight rating and $105 price target in the face of declines. The Needham team echoed this sentiment, reiterating a Buy rating and $100 target. Susquehanna went a step further and actually raised its price target in response to the report, but its $110 price target was only higher than Wedbush's $120.
significant upside
Roku stock struggled to stay flat around $64 during Thursday's trading, representing a nearly 90% upside target. This kind of upside potential is too good to pass up, especially if the technical structure of the rally remains intact. Sure, you might have to hold your nose when buying a very weak stock while many others are at all-time highs, but it's these kinds of situations where outsized opportunities sometimes come into play. it might be?
The stock's Relative Strength Index is 27, indicating extremely oversold conditions, and if the stock continues to fall, there is strong support around $55. But don't forget, the company still beat analysts' expectations last quarter and was able to beat expectations for the current quarter as well. Isn't that the kind of company we all want to join?
It is worth noting that in addition to the uncertainty about growth strategies in international markets, there are concerns about increasing competition in the streaming sector. Admittedly, tailwinds like this seem to have taken some of the shine off an otherwise promising report, but investors can certainly be fickle sometimes. If you're on the sidelines right now, you should consider that much of the expected downside is already priced into the stock, and the upside potential is too great to ignore at this point. .
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