The stock opened lower by about 9%, fell as much as 9.8% and then rebounded Thursday rather quickly.
Shares are down less on the day now. But does Roku even deserve to be down?
The report was rather strong, with the company delivering a top- and bottom-line beat and providing solid guidance.
Most metrics came in ahead of expectations, although there were a few misses in there that seem to be causing some hesitation among investors.
If Roku was trading at all-time highs like it was a few weeks ago, then perhaps this type of dip would be more reasonable.
However, shares were already down 14.5% from the highs coming into Thursday’s session. A near-10% dip on top of that doesn’t make sense.
Trading Roku Stock
It seems like investors were ready to sell this stock (and many others) regardless of the earnings reports. Twilio (TWLO) - Get Twilio, Inc. Class A Report comes to mind after its recent post-earnings dip on solid results.
Roku shares opened below last month’s low, at $391.18. However, the stock was quick to reclaim this level, as well as the 50-day moving average and the $400 level.
That’s a good showing by the bulls, as they quickly bid up the stock from its low.
From here, Roku is contending with its 10-week moving average and the 61.8% retracement of the current range.
Above those levels and the gap-fill mark is in play near $413.50, followed by the 10-day and 21-day moving averages.
If the market holds up and Roku can reclaim these marks, a large rebound may be on the table. $450 to $460 could certainly be in play in that scenario, followed by $485 resistance.
On the downside, keep an eye on the post-earnings low, currently at $379. A break of this mark could put the 21-week and 200-day moving averages in play.
This company is enjoying strong secular growth and continues to beat analysts’ expectations. For now, the trend is our friend in this one.
In that regard, I’m much more interested in buying the dip in this name rather than trying to sell into the bounce.