Roku, Inc. (ROKU) shares soared more than 10% on Monday morning after the company updated its operating figures ahead of business meetings at the Consumer Electronics Show (CES) in Las Vegas. Roku reported fourth quarter active accounts that rose 40% to over 27 million, along with streaming hours that rose 68% to 7.3 billion hours. Final operating metrics, full-year financial results and guidance for this year are due out in February.
While the stock has experienced a significant decline over the past year, Needham analysts called Roku a "top pick in 2019," citing over-the-top video growth, strategic positioning and demographic reach. The analyst firm also noted that Roku's acquisition potential provides a key value driver, with about 24 million unique active accounts that generate nearly three hours of viewing time per day per household. However, Chinese trade tensions continue to weigh on the stock as Chinese-made TV sales could experience a slowdown.
From a technical standpoint, the stock rebounded from trendline support in late December and broke out from short-term trendline resistance earlier this year to the pivot point at $33.44. During Monday's session, the stock broke out from those levels to trendline, 50-day moving average and R1 resistance at around $41.00. The relative strength index (RSI) rebounded to still-neutral levels of 57.08, while the moving average convergence divergence (MACD) experienced a bullish crossover in late December that is continuing into January.
Traders should watch for a breakout from key resistance at around $41.00, which could signal a change in its long-term trend. If that occurs, the stock could move toward R2 resistance at $50.51 or prior highs at around $60.00 or $75.00 over the long term. If the stock rebounds lower from these resistance levels, traders could see a move lower to retest the pivot point to $33.44 or trendline support near $30.00. However, the bullish MACD and modest RSI suggest that there could be more room for upside during this upswing.
The author holds no position in the stock(s) mentioned except through passively managed index funds.