They used a price target of $30 (up from their prior target of $25) even though they downgraded it to an underweight rating. On Friday, though, shares were down another 8% in early trading after Citigroup analysts downgraded Roku to a sell rating, TheStreet's Jim Cramer pointed out on CNBC's "Mad Dash" segment.
The analyst called for a decline to $28, down roughly 40% from Friday's trading price.
The IPO was mispriced from the start, Cramer said. Roku went public in late-September at $14 per share. The stock hit $30 on its second day of public trading, before cooling off for a few weeks. However, it didn't take long for the stock to soar on an "overreaction" -- in the words of Morgan Stanley analysts -- to the company's third-quarter earnings results.
It quickly propelled shares above $40 and as of just a few days ago, $60 wasn't an unrealistic target.
But that was then.
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On Friday, Citigroup analysts cite the potential competitive headwind Roku faces from the likes of Alphabet (GOOGL) - Get Report , Apple (AAPL) - Get Report and Amazon (AMZN) - Get Report , noted Cramer, who also manages the Action Alerts PLUS charitable trust portfolio.
Roku stock is in very short supply, which has helped drive the stock up. However, analysts also point out that a lockup expiration in March could bring new supply of stock to the market to help meet demand.
While this should help the supply/demand dynamic, it's not likely to be a positive for the stock, Cramer reasoned. While it's not directly the same, he also said there are some parallels between Roku, Fitbit (FIT) - Get Report and GoPro (GPRO) - Get Report .
"It was a great, great quarter for Roku," Cramer said, "but there's a lot of competition coming."
Watch the replay of Jim Cramer's full NYSE live show:
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL and GOOGL.