Roku shares fell by about 30% last week, the worst performance of the company since its 2017 initial public offering.
It started when Comcast and its owner, CNBC, announced its offering of a free streaming box to its internet clients. Pivotal Research, on Friday, tagged Roku shares with a sell rating and a $60 price target, reasoning that the rush in the competition will leave Roku in the dust.
Craig Johnson, the chief market technician at Piper Jaffray, said that the fall could go from bad to worse.
A move that falls to $75 is a 30% downside from the present levels. Roku has not traded at that price since May.
Johnson said on CNBC’s Trading Nation that Roku “violated the uptrend support line off those April lows of this year.” He also commented that support comes typically at the $113 level, but the best support comes back down at the 200-day moving average.
“You could see the stock trade back down to $81, even $75,” he further added.
Johnson also discussed that the fall might continue, estimating that the stock has a 7% relief rally upside at best, and about a 30% downside at worst.
“This risk and reward aren’t favorable. The stock is up, but it has sold quite a bit recently. I’d be selling into this move.”
However, the founder of Joule Financial, Quint Tatro, does not see Roku shares the same way.
Tatro says that he does not agree with Pivotal Research and their claims of losing market share.
He also said that a fall of Roku’s share of 14 to 15 times sales would make him a buyer.
Tatro comments that Roku is essentially a cord-cutting device, and so that other brands can compete in their niche, cable companies will offer their own device for free. The heated competition argument does not convince Tatro.