There is growing investor sentiment that Roku (NASDAQ:ROKU) “rocks” after the streaming device service announced it will start carrying HBO Max effective Dec. 17. The shares were up 7% in pre-market trading this morning.
Why the excitement? It’s not TV, it’s HBO Max. That is, the premium platform that was recently designated as the place where fellow AT&T (NYSE:T) unit WarnerMedia will simultaneously release its films.
The HBO Max offering is just the latest move that really boosts the case for ROKU stock, which was benefitting this year from the continuation of cord-cutting and all the people watching more TV because of Covid-19.
ROKU stock is up a whopping 308% since mid-March, compared to a 55% gain for streaming competitor Netflix (NASDAQ:NFLX).
ROKU Stock Gains At Theatres’ Expense
Roku’s achievements further cast a pall on the traditional theatre-based movie business. AMC Entertainment (NYSE:AMC) and its movie theater peers have, understandably, been having a very bad year. It was bad enough that across the country, theatres were blocked from business by coronavirus fears and local lockdown orders, as 81% of Americans have avoided going out to the movies since March.
Now, an HBO Max-infused Roku could spell even more trouble for the cineplex. AMC stock is already down 52% since Labor Day, having missed summer blockbusters and now the Christmas releases.
Under the new arrangement, each WarnerMedia film will be on HBO Max — and Roku — for a month, and then will leave the streaming service to be shown exclusively in theaters for a set period of time. It all starts on Dec. 25 with the simultaneous theater and streaming release of Wonder Woman 1984.
Analysts Like the News
What’s not to like about the ROKU stock news? Seemingly nothing, if you listen to Wall Street analysts. Take Benchmark analyst Daniel Kurnos, who this morning boosted his 12-month price target on ROKU stock to $410 from $300, pinning his forecast on what he thinks could be “significant upside surprise” from the current quarter. He maintained his “buy” rating on the shares.
In the third quarter, Roku reported the pandemic boost wasn’t showing any sign of letting up. Active accounts were up 43% year over year, streaming hours were up 54%, revenue beat estimates and increased 73%, while monetized video ad impressions were up by nearly 90%, InvestorPlace analyst
He offered investors Roku as one of his seven picks for tech stocks in line to see either a big holiday boost in sales of their products, or a surge in sales using their services.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.