Roku Stock Downgraded Amid Walmart Headwinds

ROKU put volume is picking up after the bear note

Deputy Editor
Feb 27, 2024 at 10:21 AM
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Roku Inc (NASDAQ:ROKU) is 2.5% lower to trade at $62.77 this morning, after Wells Fargo downgraded the streaming stock to "under weight" from "equal weight" and trimmed its price target to $51 from $77. The analyst in coverage cited Walmart's (WMT) upcoming acquisition of Vizio (VZO), noting that Walmart is roughly one-third of Roku's Device sales/net adds, and the deal will likely pressure these figures in 2025 and 2026.

Roku stock suffered a post-earnings bear gap of 23.8% on Feb. 16. The shares are now 31.8% lower in 2024, and are consolidating around their year-over-year breakeven mark.  

Shifting sentiment in the options pits could put more pressure on ROKU, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.66, which stands higher than just 6% of readings from the past year, indicating short-term options traders have rarely been more call-biased. 

While calls are outpacing puts on an overall basis today, puts are growing in popularity already. So far, 8,564 calls and 6,233 puts have crossed the tape, but puts are running at double the intraday average volume, with the April 80 put the most popular by a wide margin. 

Now may be an ideal time to weigh in on Roku stock's next move with options, as the equity sports attractively priced premiums at the moment. ROKU's Schaeffer's Volatility Index (SVI) of 54% stands higher than just 10% of readings from the last 12 months.


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