Roku had one of its best days on the market ever very recently, with stock prices at an all-time high of $329.48 per share. Earlier that same day the prices had surged by 11.7% to $352.12 per share. The cause of the spike was the announcement that Roku and WarnerMedia had finally reached an agreement in order to bring HBO Max to Roku services. This has been just another high point on a very solid year for the company, whose stocks have been up 146% since the same time last year.
As of December 17th, customers with Roku-enabled TVs who also subscribe to the SVOD package will have access to HBO Max, just in time for the release of Wonder Woman 1984. This was almost certainly a significant motivator to get the deal signed and makes a very strong opening argument for why Roku users should be excited. This deal allows Roku to sell HBO Max to users and take a cut of the profits. Standard Roku agreements see the company take 20% of subscription revenue and 30% of advertising inventory, but the specific details of the HBO Max deal have not been disclosed.
With this deal, HBO Max is now available on pretty much every major device, including Fire TV, iOS devices, Playstation, Xbox, and Google devices. Upon the announcement, analyst Daniel Kurnos raised his 12-month price target for Roku stock from $300 to $410. While addressing the increased estimate, he wrote: “While we acknowledge that a lot of the good news already appears to be priced into the stock, we still anticipate a significant upside surprise in 4Q, driven by advertising strength bolstered by material [advertising] CPM [cost per thousand] improvement, which should flow through into 2021.” Long story short, Roku stock is going up, and is expected to keep rising over time.
Not only is this deal good for Roku, who get to add a major service to their platform, it should also boost HBO Max subscribers, which may help make up for lost box office income due to Coronavirus lockdowns. While the service hasn’t been doing terribly, estimates suggest it will need 8.6 million new subscribers if the company wants to fully make up for lost theater revenues. Hopefully, the addition of HBO Max to the Roku platform ends up being good for audiences and the company sees what they hoped for out of the investment.
HBO Max is now available on Roku enabled devices.
Source: Variety
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