PreMarket Prep Stock Of The Day: Roku

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

It's always interesting to follow price ahead of the newsflow to see if there's any correlation On many occasions, the price action precedes the newsflow. This just happens to be the case with Roku Inc. ROKU.

Roku Win Streaks: Following back-to-back losing days on June 15 and June 16, Roku embarked on a very impressive rally. In fact, it just happens to be the issue's longest winning streak since Jan.5-12. Over that period of time, Roku rallied from $335.18 to $415.49 on a closing basis for a 24% gain.

As of 2:30 p.m. ET. today, Roku is in the midst of a seven-day winning streak and has rallied from its June 16 close to ($336.87) as high as $431.98 earlier in the session, but retreated to the lower $420 handle. That marks a better return than during its January run.

Relevant News: At the onset of the rally, there was no news to account for until midday on the third day of the rally on June 18. Before the open, the company reported that during the period from May 20 to June 3, the company reported a record number of unique accounts streamed on the Roku Channel.

Then combined with explosive price action in the high price/earnings growth technology sector certainly justifies the gains from $352.30 to $368.43 during the June 18 session. It should be noted that during the market rout last Friday, Roku was firmly in the green.

Crickets: Once again, in sympathy with the strong rally in the broad market, Roku leaped from $348.43 to $402.50 on Monday. It tacked on nearly another $20 Tuesday, moving from $382.73 to $403.50.

On Wednesday, the issue did something it hasn't done in quite a long time. On no news, it gapped higher and the opening print ($306.50) was the dead low for the session. After the open, the issue churned higher with no significant retreats.

Wait, There is News: Just before 3 p.m. Wednesday, with the issue much higher for the session, it spiked higher following a remote mention in a Wall Street Journal report that Comcast CMCSA may consider a bid for the streaming platform

Despite the huge premium Comcast would have to pay for the company compared to a few months ago and all of the regulatory hurdles it would need to clear, traders went with the rumor.

Comcast immediately responded with a statement from its CEO stating the company "doesn't feel a need to seek a merger in the streaming space," but has considered options, including a merger with ViacomCBS VIAC or acquisition of Roku.

Certainly, the latter part of the statement is responsible for the continued strength in the issue on Thursday and so far, in Friday’s action.

See Also: Why A Comcast Buyout Or Roku Is Unlikely

Price Action: For the first time during the current winning streak, Roku has the chance of making a pair of highs in the same area.

After peaking on Thursday at $431.78, $431.98 makes the high for the session and has now has backed off into the mid $420 handle. Whether or not this is just another opportunity to purchase shares before it's taken out by Comcast, or is the start of some profit-taking after its massive rally will be determined in the not-so-distant future.