Streaming Stock Cools Off Despite Blowout Q4 Earnings

The equity remains up over 260% year-over-year, though

Assistant Editor
Feb 19, 2021 at 10:33 AM
facebook twitter linkedin


The shares of Roku Inc (NASDAQ:ROKU) are down 1.1% at $448.05 at last check, despite the streaming device giant reporting fourth-quarter earnings and revenue that easily topped Wall Street's estimates. Specifically, the security posted stellar quarterly profits of 49 cents per share -- compared to the 5 cent losses analysts predicted -- on $649.9 million in revenue. The company attributed the strong results to customers flocking to streaming devices during the pandemic.

In response, the security earned no fewer than 11 price-target hikes, including a massive one from D.A. Davidson to $560 from $300. The analyst in question is positive Roku can increase its advertising load and pricing going forward. Analysts were already optimistic toward the stock coming into today, too, with 12 of the 20 in question sporting a "buy" or better rating. Meanwhile, the 12-month consensus target price of $353.07 is a massive 21.1% discount to current levels. 

On the charts, the equity has pulled back slightly from its Feb. 16, all-time high of $486.72. However, the 30-day moving average has been guiding ROKU higher since November, catching a few pullbacks along the way. Longer term, the stock is up 261.1% year-over-year. 

An unwinding of pessimism in the options pits could also push ROKU higher. This is per the security's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings in its annual range. This suggests puts have been picked up a quicker-than-usual clip.

That shift seems to be already underway. So far today, 33,000 calls and 26,000 puts have crossed the tape -- three times what is typically seen at this point. The February 500 call is the most popular, followed by 470  call in the same monthly series, with new positions being opened at the latter. In other words, investors expect more upside for ROKU by the end of the day, when contract expires.

Make the Most of the next Expiration Week Countdown!


 




 
Special Offers from Schaeffer's Trading Partners