Roku shares 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 a firm endorsement from billionaire media oracle John Malone.
The stock has nearly doubled in 2020 as COVID-19 has boosted 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, CA-based tech firm. Earlier this month, it reported 14.8 billion hours of streaming in the third quarter, up 54% from the same point in 2019.
One new streaming entrant lacking a deal with Roku is WarnerMedia’s HBO Max. The subscription service just announced distribution with Amazon Fire TV — a major gatekeeper — on Monday. Two days later, Warner Bros said Wonder Woman 1984 would be released on HBO Max as well as in theaters next month, intensifying speculation that Roku’s 46 million households would soon enter the fold. HBO Max launched in May and has not caught fire in its early months, though WarnerMedia says its 8.6 million account activations puts it on track to achieve internal targets.
Related Stories
Media blog The Desk reported Thursday that the two companies were on the verge of announcing a deal. That report was not confirmed, but it appeared to capture investors’ imagination. Trading volume of nearly 12 million Roku shares was well above average.
Watch on Deadline
Malone, chairman of Liberty Media, singled out Roku for affirmation in an interview with CNBC’s David Faber. “The consumer’s not going to want to buy from a broad number of subscription services. They’re going to tend to want to go to one convenient supplier. It looks increasingly like that’s going to be, you know, Amazon … or it’s going to be Apple, or it’s going to be Roku.”
Because it isn’t sinking money into programming, Roku can keep its focus on distribution and advertising and is “in pretty good position to build a long-term profitable global business,” he added.
Jeffrey Wlodarczak, an analyst with Pivotal Research Group, cited Malone’s thumbs-up in a report to clients Thursday raising his rating on Roku from “sell” to “hold.” He also vaulted his price target on shares by the end of 2021 to $240 from $75.
Earlier, the analyst had expected a lot of competitors with deep pockets to overwhelm Roku. But the pandemic, he wrote, “appears to have accelerated Amazon and Roku’s lead (and pushed back competitive responses) with the potential for that lead to be sustainable especially as the platforms build global scale.”
I’ve had HBO Max since practically the beginning, and I can’t wait for this deal with Roku to go through. I’m patient. I can wait a little longer. But it was a little unsettling that Amazon fire has the app already.
Hbomax is having a free trial period beginning on thanksgiving day. I know they would like to have exposure to as many people as possible especially with the new wonder woman 1984 movie coming out at Christmas. I would expect a deal with roku to be à nnounced possibly within the next three days! Be ready!
I just read about Amazon making the deal in part with HBO Max because they are not having HBO Max on the ‘Channels” area of the Fire TV UI. I would be VERY careful about the Roku stock rumors….I hope they are true….the Fire Stick is clunky & awkward compared to the Roku (or maybe we just got spoiled using Roku). Anyways I doubt very much that Roku will grant this same concession to HBO Max. All 3 players here HBO MAX, Roku, as well as Amazon should have all had a deal done months ago! All that cash up in smoke with all the people that have been stuck at home with nothing to do but watch TV. The top Executives at both Roku and HBO Max should have all been fired within the first 2 weeks after the launch and then just got the deal done back then with new people. Anyways I also have it on Xbox, but you mean to tell me it won’t work (without that Apple workaround which we do not have Apple Devices anyways) on our Roku in the living room? What? They need to get this done soon or we may have to move on from Roku & we won’t be coming back.