Shares of Roku Inc (NASDAQ: ROKU) are down another 35% year-to-date, but Simpler Trading’s Danielle Shay says she still wouldn’t buy the stock at current levels.
Shay defends her bearish outlook on CNBC’s ‘The Exchange’
According to Shay, neither fundamentals nor the technical setup in Roku makes it worth owning. Explaining her reasons for being bearish on the stock, she said on CNBC’s “The Exchange”:
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Roku is down 67% from its high. You have many people that bought it near the highs when momentum was strong. So, any time you see positive news and the stock rallies, you’ll have those people wanting to get out. It creates so much overhead resistance; technicals have broken down.
On the fundamental side, Shay sees Roku as an obsolete story in times of smart TVs. She expects it to end up like VCRs in the future. Her outlook is similar to Jim Cramer’s, who says, “every time I look at Roku, I want to sell it.”
Atlantic Equities sees more downside in Roku Inc
Earlier in January, Atlantic Equities’ Hamilton Faber also warned of fading growth prospects for Roku in the wake of heightened competition. The analyst has a price target of $136 on the stock that represents another 10% downside from here.
In November, the streaming company gave dovish guidance for its fiscal fourth quarter. It will likely report its Q4 earnings in mid-February.
For investors looking to buy promising stocks at a discount, Shay recommends Costco and Lowe’s, both down more than 10% for the year. She also finds MSFT quite attractive after the recent sell-off in the broader tech space.
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