ROKU Pulls Back to Bullish Trendline Before Earnings

The stock has a split post-earnings history in the past couple years

Deputy Editor
Aug 3, 2021 at 2:31 PM
facebook X logo linkedin


The shares of Roku Inc (NASDAQ:ROKU) are down 1.3% to trade at $416.00 at last check, ahead of its second-quarter earnings report, due out after the close tomorrow, August 4. 

The equity is expected to post profits of 13 cents per share, and has a split post-earnings history -- closing half of its next-day sessions higher during the past two years. The security has averaged a post-earnings swing of 10.7%, regardless of direction. This time around, the options market is pricing in a slightly bigger move of 12.4%. 

On the charts, ROKU has pulled back from its July 27 record high of $490.76. However, this fall has the stock within one standard deviation of its 40-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, 10 similar signals have occurred in the past three years. Roku stock enjoyed a positive return one month later in 67% of those cases, averaging a 12.6% gain. From its current perch, a comparable move would send the stock back toward its recent highs. 

ROKU 0803

Yesterday, Morgan Stanley threw in a price-target hike to $325 from $300. However, the firm kept an "underweight" rating on the shares. Analysts are mostly optimistic, though. Of the 20 in coverage, 17 consider the stock a "buy" or better. 

Meanwhile, now looks like a good time to weigh in on Roku's next move with options. The security's Schaeffer's Volatility Scorecard (SVS) sits at a high 95 out of 100, meaning ROKU has exceeded option traders' volatility expectations during the past year.

 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!