That was likely due largely to a note from Citi Research analyst Mark May, who followed up Monday’s Apple TV+ announcement with a note that called it “a slight incremental negative for Roku.”
Roku stock, up 4.7% Monday, was recently down 4.5% to $63.92.
Monday’s bump was helped by the confirmation that Apple’s new ad-free streaming app—due in the fall, with prices to be announced—will eventually be available on Roku’s platform.
For the company, essentially a content aggregator, the availability of more services could, generally, make Roku (or Roku-powered) devices more compelling to consumers.
“The Apple TV app will be available on Roku devices, which will keep it competitive in the market from a content selection perspective,” wrote May, who has a Neutral rating and a $53 price target, below FactSet’s $67 average, on the stock.
While Roku’s platform includes Netflix (NFLX), it makes no direct revenue from that company’s service. The new Apple TV offering could be the same, according to May. A Roku spokesman declined to detail specifics of the company’s relationship with Apple.
“Given that the Apple TV app is ad-free and given that popular apps from well-established companies (e.g., Netflix, Amazon [AMZN] Prime Video) have historically not driven material direct ad revenue for Roku, it’s possible that the inclusion of the Apple TV app on Roku devices alone will not drive meaningful incremental direct ad revenue,” May wrote.
May also wondered whether, if consumers use Roku devices to access Apple’s service, it might cut into time they might otherwise spend on the platform generating revenue by viewing ads or purchasing premium content from other providers.
Shares of Roku are up more than 100% in 2019.