What happened
Shares of Roku (ROKU 5.90%) were sharply higher Thursday, adding as much as 7.9%. As of 2:54 p.m. ET, the stock was still up 3.4%.
While the broader market move certainly provided a tailwind, there were several developments that had Roku investors bullish.
So what
Two pieces of news dropped that were decidedly positive for the streaming pioneer.
Image source: Getty Images.
The company announced its first adult-oriented animated program, DOOMLANDS, will premiere on The Roku Channel on Jan. 28. From the mind of creator Josh O'Keefe, "DOOMLANDS is a post-apocalyptic animated comedy soaked in dust, beer, and blood. It's an homage to Ozploitation and Sci-Fi cinema, and after many years in development, I'm so stoked for it to debut on The Roku Channel," O'Keefe said.
Roku has been expanding its library of original content with a fair degree of success. Its first original movie, Zoey's Extraordinary Christmas, was the No. 1 viewed program globally on The Roku Channel during its opening weekend. The feature-film was also nominated for a Critics Choice Award, in the "best movie made for television" category.
The program will join This Old House and award-winning original content from the short-lived Quibi service, which Roku acquired last year.
Another potential catalyst was word that Cathie Wood's ARK Investment Management had added roughly 202,000 shares of Roku stock to its holdings. Roku has become a top 10 holding for several of ARK's exchange-traded funds (ETFs), including a No. 4 position in the ARK Innovation ETF, which holds more than 4.7 million Roku shares valued at roughly $790 million.
Now what
Roku stock has been taken out to the woodshed as of late, dragged lower by the downdraft that has gripped tech stocks since mid-November. Investors have also been concerned about slowing growth at the streaming specialist, though some believe the temporary deceleration is the result of loosening pandemic-related restrictions and summer vacations.
Many (myself included) believe this is a buying opportunity. Deutsche Bank analyst Jeffrey Rand lowered the price target on Roku shares to $300 while maintaining a buy rating, saying the recent sell-off is "overdone." If he's right, it represents potential gains for investors of more than 80%. My money is on Roku.
