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Here's Why Roku's Volatility Is OK With This Equity Strategist

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Here's Why Roku's Volatility Is OK With This Equity Strategist
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Shares of Roku Inc (NASDAQ: ROKU) bottomed at $15.75 shortly after its initial public offering but have since soared above the $50-per-share mark. The stock could be considered as one of the hottest tech names of 2017 — but also one of the most volatile.

The Expert

Matt Maley, an equity strategist with Miller Tabak.

The Strategy

Long-term investors shouldn't be concerned with the near-term volatility in Roku's stock, Maley said. 

The Thesis

Roku's history as a public company is short, which makes it difficult to look at the stock's chart to identify any trends, Maley said during a recent CNBC "Trading Nation" segment. While the chart does show a one-day correction of 12 percent earlier this month, it's not an unheard-of move, he said. What is important to note is that after the sell-off, the stock bounced back to trade higher and push its way to $50 per share.

"The one thing we need to know is companies like this have such good upside potential in terms of their business," he said. "10 percent, 12 percent, 20 percent corrections are going to happen all the time. You look at Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), any of these companies, the first two years of their existence they saw considerable pullbacks."

Price Action

Shares of Roku hit a new all-time high of $50.90 Tuesday morning before pulling back and trading at $48.98, up 5 percent on the day.

Related Links:

Roku Dips And Rips

Expert: Roku's Post-Q3 Run Could Be Masking Balance Sheet Concerns

Photo courtesy of Roku.

Latest Ratings for ROKU

DateFirmActionFromTo
Jan 2019CitigroupMaintainsNeutralNeutral
Dec 2018KeyBancMaintainsOverweightOverweight
Dec 2018SunTrust Robinson HumphreyInitiates Coverage OnHold

View More Analyst Ratings for ROKU
View the Latest Analyst Ratings

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Latest Ratings

StockFirmActionPT
SHWKeyBancMaintains450.0
ACNCitigroupUpgrades169.0
CGBDJP MorganUpgrades15.5
NLYJP MorganUpgrades10.5
NTNXMorgan StanleyUpgrades58.0
View the Latest Analytics Ratings
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