35.81 -1.34 (-3.74%) Sell

ROKU investors dump it for better alternatives

13 min read

ROKU significantly underperformed today. On a longer term basis, investors in ROKU, INC made +0.3% per day. Tuesday's performance of -3.74% was a significant underperformance compared to it's daily average.

[Themes containing ROKU]

Buy-and-Hold investors in ROKU experienced a maximum drawdown of -53.18% over the last three months. It lost -49.52% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +36.58%.


ROKU has been underperforming the SP500 index in recent time, after having outperformed till 1 Oct, 2018. Over the last 1 year 2 months and 13 days, ROKU outperformed the SP500 index on 48% days. Which indicates that on days ROKU outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months ROKU was mostly loss making and delivered on average -0.96% per day. It's best return during this period (of +7.72%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -22.29%) was on Thursday, 8 Nov, 2018. There was initially a bearish trend during this period which started on 8 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -16.82% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +14.05% to investors.

ROKU had 7 profitable and 5 loss making months over the last year. During the last year, ROKU underperformed SP500 index on monthly return basis. ROKU significantly outperformed SP500 index in Aug 2018, when it returned +30.98% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ROKU and SP500 index, both had periods of 6 consecutive profitable months.

When I graduated, I promptly took a job in finance, making both my pre-med and poli-sci years essentially useless - or so I thought.
-- Yael Cohen

ROKU is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant fall in ROKU's volatility from 12 Sep, 2018 to 27 Sep, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ROKU has significant negative skewness in it's return distribution. This indicates that ROKU is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in ROKU derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than ROKU. Therefore, SP500 must receive a lower allocation than ROKU in your portfolio. SP500 index usually has shorter drawdown period than ROKU.

Based on your interest in ROKU you may find it interesting to know that AMRN and I have both shown remarkable performance this year and deserve to be on every investors' watchlist.

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