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Roku stock closed at a new record high of $ 255.67, up more than 10% for the day, on whispers of a distribution deal with HBO Max and strong backing from the billionaire media oracle John Malone.
The stock nearly doubled in 2020 as COVID-19 increased overall streaming hours. The influx of new services like Disney +, Apple TV + and Peacock to challenge Netflix has been a positive development for the Los Gatos, California-based tech company. Earlier this month, it reported 14.8 billion hours of streaming in the third quarter, up 54% from the same point in 2019.
WarnerMedia’s HBO Max is a streaming newcomer missing the deal with Roku. The subscription service just announced distribution with Amazon Fire TV – a major guardian – on Monday. Two days later, Warner Bros declared Wonder Woman 1984 would be released on HBO Max as well as in theaters next month, stepping up speculation that Roku’s 46 million households would soon come into the fold. HBO Max launched in May and didn’t catch fire in its first few months, although WarnerMedia says its 8.6 million account activations put it on track to meet its internal goals.
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The Desk media blog reported on Thursday that the two companies were on the verge of announcing a deal. This report has not been confirmed, but it seemed to capture the imaginations of investors. The trading volume of nearly 12 million Roku shares was well above average.
Malone, president of Liberty Media, chose Roku for the assertion in an interview with CNBC’s David Faber. “The consumer will not want to buy from a large number of subscription services. They will tend to want to go to a convenient supplier. Looks more and more like it’s going to be, you know, Amazon… or it’s going to be Apple, or it’s going to be Roku.
Because it does not invest in programming, Roku can continue to focus on distribution and advertising and is “in a good enough position to build a profitable global business in the long run,” he added.
Jeffrey Wlodarczak, analyst at Pivotal Research Group, cited Malone’s thumbs up in a report to clients Thursday, shifting his rating on Roku from “sell” to “keep.” It also exceeded its price target on stocks by the end of 2021, dropping from $ 75 to $ 240.
Previously, the analyst expected many deep-pocketed competitors to overwhelm Roku. But the pandemic, he wrote, “appears to have accelerated the lead of Amazon and Roku (and pushed back competitive responses) with the potential for that lead to be sustainable, especially as platforms are developing globally.
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