Please ensure Javascript is enabled for purposes of website accessibility

Why Roku, Netflix, and Lions Gate Stock All Popped Today

By Rich Smith - Updated Mar 17, 2020 at 6:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With movie theaters suddenly out of the picture, streaming shares turn into winners.

What happened

In retrospect, this should have been obvious. After states across the nation began ordering the closure of restaurants to promote social distancing, it was probably inevitable that movie theaters would be next to close.

Close they did, with the announcements going out Monday night and today. And that should have made it obvious which stocks would benefit from the elimination of competition from old-school cinema: streaming stocks.

True to form, shares of the top maker of over-the-top streaming devices, Roku (ROKU 9.71%), and the most popular streaming video provider, Netflix (NFLX 3.29%), closed trading today up 8.8% and 7%, respectively.

Hand holds a remote in front of a wall of TV screens

Image source: Getty Images.

So what

Of course they did: In retrospect, as I say, this was obvious. Roku stock had just finished plunging 21% in Monday trading, and Netflix had just lost 11% that day. With Tuesday's news promising better times ahead for both companies, it was all but inevitable that these stocks would snap back and recover at least some of their losses on Tuesday.

It's this same streaming angle, I suspect, that explains why Lions Gate Entertainment (LGF-A -2.57%) (LGF-B -3.41%) jumped 12.5% in Tuesday trading as well. While best known as a moviemaker, Lions Gate also owns the Starz and Encore movie networks, acquired in 2016. Both are available as streaming services.

As a streaming play, therefore, Lions Gate, too, was due for a bounce back today.

Now what

Will it continue bouncing higher, along with Roku and Netflix?

That probably depends on which numbers investors decide to focus on. If still fixated on revenue growth, then Roku, with sales up 52% year over year in the past year, should be investors' clear favorite to continue streaming higher in the days to come. If they insist on profitable revenue, though, Netflix is the only one of these three companies currently reporting profits as calculated according to generally accepted accounting principles (GAAP), while Lions Gate is the only one generating real free cash flow.

Depending on which number investors think most attractive, any of these three companies could turn out to be the next big winner.

Or if we fall into a recession, perhaps none of them will.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$185.88 (3.29%) $5.93
Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
$8.71 (-2.57%) $0.23
Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
$8.22 (-3.41%) $0.29
Roku Stock Quote
$92.06 (9.71%) $8.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.