PreMarket Prep Stock Of The Day: Roku Nears All-Time Highs

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.

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On some occasions, an issue may immediately react to a positive catalyst and rally and do the same when the catalyst is reinforced. That scenario applies to Roku Inc. ROKU.

Volatile Stock: After ending 2020 at $332.02, Roku bolted to a new all-time intraday high in February to $486.72. When the focus of investors shifted from growth and technology to value and small caps, it took a tumble.

That retreat took the issue well under its year-end close and even breached its December low ($273.79) to $272.41 on May 6. However, when the rotation reversed back into its sector, it responded in kind.

In addition, rumors of the company being acquired by Comcast CMCSA instigated a 10-day surge in the issue from its closing price on June 16 ($336.67) to nearly its all-time high, when it peaked on June 30 at $462.99. It ended that session at $459.25 for a tidy 10-day return of 36%.

No Deal, No More Buyers: As so often happens, when an issue runs up on takeover speculation and a deal doesn't come to fruition soon, the price will fade. That is exactly what happened with Roku as it retreated at the beginning of July.

The retreat from that interim high came on Monday, along with the broad market when it bottomed at $391.18 and rebounded to end the session at $404.70.

Catalyst Round 1: Before the open on Tuesday, the company announced it had partnered with NBCUniversal to bring a new immersive experience to Roku ahead of the Tokyo Olympics.

The momentum off that announcement produced a two-day gain to $422.13. Roku extended the high of the rebound on Thursday to $430.82, but retreated to end lower on the session at $420.65.

Catalyst Round 2: With the broadcast of the opening ceremonies taking place on Friday at 7 a.m. ET, investors were reminded of the previously announced partnership and began aggressively purchase shares of the issue off the opening bell.

Also, it rekindled the notion that the two major streaming companies may be more closely tied to each other in the future. Not necessarily a takeover, but more strategic partnerships such as the one for the Olympics.

Price Action: With a strong rally in the broad market as a tailwind, Roku is having a great day.
It continued to make new highs for the session, until around 11:30 a.m., when it peaked at $459.50. Interestingly, that matches the closing price from its June rip, which was $459.25.

Since making that intraday high, some profit-takers have come in and nudged the issue to the $457.50 area. As of 2 p.m., the stock picked up momentum and is trading around $465.88.

Editor's note: The stock closed at $473.65, a new all-time closing high.