Can Roku Climb to $200 and Beyond? - TheStreet

Can Roku Climb to $200 and Beyond?

Roku exploded higher on Monday, rallying more than  17% after coming to an agreement with Comcast's Peacock. How long can the rally last?
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Roku  (ROKU) - Get Report shares were continuing slightly higher on Tuesday, up about 1%. However, it was Monday’s price action that thrust Roku onto traders’ radar.

Shares erupted more than 17% on Monday on news that the company had come to an agreement with Comcast’s  (CMCSA) - Get Report Peacock streaming platform.

In the 11th hour, the two parties hammered out a deal, although the terms were not disclosed. Still, it will put Peacock on Roku’s platform.

The situation is a win-win in my view. Peacock finds itself on the most popular streaming platform at a time where streaming has more momentum than ever before.

For Roku, it adds one more service to its growing network. It also potentially gives it leverage with AT&T’s  (T) - Get Report HBO Max, which is notably missing from Roku.

While the stock opened modestly higher on Monday - up about 3.5% - shares quickly gained momentum and barreled higher. Up slightly on Tuesday, investors are wondering if Roku can hit $200.

Trading Roku Stock

Daily chart of Roku stock.

Daily chart of Roku stock.

Shares closed right near the highs on Monday and gave traders a solid red-to-green day-trading opportunity on Tuesday.

Now we need to see that Roku holds up over its highs from earlier this month, near $185. The stock temporarily ran to this mark when it broke out over its prior all-time high, all the way back from September 2019.

The situation with Roku has been interesting. On the one hand, it has lagged its growth peers, so it’s got some investors wanting to avoid this so-called laggard in favor of others. On the other hand, because it has lagged, some are looking to Roku to play catch-up with its peers.

Because Monday’s breakout was so definitive, bulls have a case to be made for higher prices so long as shares do not retreat significantly from current levels.

Ideally it will hold up over that $185 area, the prior highs from earlier this month. Below that though and Roku must hold up over the prior breakout zone at $176.55.

While the 50-day moving average may be still act as support below that mark, losing this zone after such a powerful rally would be really disheartening.

On the upside, let’s see if Roku can push back through Tuesday’s high, currently at $195.36. Above that puts $200 in play, followed by the 123.6% extension at $204.48 (when measured from the March low to the September 2019 high).

If Roku really gains momentum, longer term bulls may consider using the 138.2% extension and 161.8% extensions as possible upside targets near $222 and $250, respectively.