Roku, Inc. (ROKU) shares rose more than 7% during Tuesday's session after the company announced the launch of Apple Inc.'s (AAPL) Apple TV App on its platform, as well as the introduction of Apple TV+ Original Shows and Movies beginning in November. In addition to the United States, the Apple TV App will be available in select Central American and European markets.
Apple's hotly anticipated Apple TV+ service debuts in November at a cost of $4.99 per month – undercutting the price of Netflix, Inc. (NFLX), Hulu, and other competing services. The company plans to offer exclusive shows, including "Amazing Stories" and "The Morning Show," as well as movies and documentaries from JJ Abrams, Steven Spielberg, M. Night Shyamalan, and others.
The move comes shortly after RBC Capital upgraded Roku stock to Outperform and raised its price target from $107 to $155 per share following the stock's pullback. Analyst Mark Mahaney believes that valuation has grown more compelling in light of the pullback and insists that Roku stock is one of the best derivative plays on over-the-top and streaming trends.
From a technical standpoint, the stock moved sharply lower in early September but posted a strong recover during the first half of October. The relative strength index (RSI) remains neutral with a reading of 57.22, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock has room to move past its critical 50-day moving average resistance at $129.47.
Traders should watch for a breakout from the 50-day moving average toward trendline resistance at around $150.00 over the coming sessions. If the stock breaks out from those levels, traders could see a move to retest highs. If the stock fails to break out from the 50-day moving average, traders could see a move lower to retest reaction lows at around $100 per share.
The author holds no position in the stock(s) mentioned except through passively managed index funds.