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Roku Stock Could Soon Hit Fresh 2-Year Lows

·1 min read

It's been a tough run for Roku Inc (NASDAQ:ROKU) stock, which has already lost 69% in 2022, and more than 77% over the past 12 months. The security has stuck close to its July 29, two-year low of $62, with pressure forming near the $75 level  Those looking to buy the dip on ROKU should hold off for now, as things could become even more dire in the coming month.

This is because the security just came within one standard deviation of its 40-day moving average, after a lengthy period below the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, Roku stock has seen six similar occurrences over the past three years. The equity was higher one month later just 17% of those instances, averaging a steep 12.2% drop. A similar fall from its current perch of $70.17 would put ROKU just above the $61 mark at a fresh two-year low.

roku sept 20
roku sept 20

Despite its dismal price action, analyst sentiment remains mostly bullish, which could leave the door open for a round of downgrades and/or price-target cuts. Of the 22 in coverage, 12 firms consider ROKU a "buy" or better, while the 12-month consensus price target of $82.30 is a 16.6% premium to current levels.

For those looking to speculate on ROKU's next move, options could be the way to go. The security's Schaeffer's Volatility Index (SVI) of 76% sits higher than 35% of readings from the past year. In other words, options traders are pricing in relatively low volatility expectations right now.