Dot-com On Steroids: Roku’s Stock Crashes 20% In One Day
Steve St. Angelo | Sep 22, 2019 02:39AM ET
It didn’t take long for high-flying Roku (NASDAQ:ROKU) to nose-dive after it skyrocketing more than 500% over the past eight months. Roku, a streaming equipment provider, saw its stock price plunge 20% today after fears of increased competition from Comcast (NASDAQ:CMCSA) and Facebook (NASDAQ:FB). The deathblow to Roku began on Wednesday as it’s stock price fell 13% when Comcast released news that it would provide its customers with free streaming players.
On Thursday, Roku’s stock recovered a bit, but then fell another 20% on Friday as Pivotal Research Group announced a $60 sell recommendation. Roku opened on Friday morning at $127 but then fell below $104 before closing at $108:
Now, if you watched my last video, , I posted a chart on Roku and explained why it wasn’t worth $170 a share. The chart below was made on September 5th, when Roku closed at $166:
As I stated in the video, Roku had skyrocketed 530% over the past eight months from $27 to $170. I also showed Roku’s financial Q2 2019 statement where I pointed out that ROKU continued to lose money and forecasted that, "Roku’s price is going to collapse at some point because it’s not worth that sort of extreme valuation."
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Here is Roku’s weekly chart:
After Roku hit $175, in just two weeks, it crashed $67 lower to $108.05. Roku was a perfect Short Trade because the stock was extremely overbought and would have fallen at some point, regardless of the news of Comcast and Facebook (FB) competition. That news release was just an excuse for investors who bought at much lower prices, to CASH IN ON PROFITS before the stock fell even further.
If we take a look at Roku’s Daily chart, we can see that it BROKE below a critical trend line:
Because Roku fell below that lower BLUE DASHED trend line, it will likely continue lower after correcting back and touching that lower trend line. I believe Roku will probably fall back to the $75 range where it has strong support level.
If we look at the Roku weekly chart, it also shows that $75 Support Level:
I wasn’t surprised that Roku fell this much because anytime a stock shoots up that quickly, it usually experiences a significant and steep correction.
I wanted to post this article on Roku to show the sort of insanity and trading that is plaguing the markets.
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