Shares of Roku Inc. are surging Wednesday, and are on track for their best day since 2019, after the streaming-media company confirmed that it will be extending its agreements with Alphabet Inc. services YouTube and YouTube TV.
Google had been in heated negotiations about the future of YouTube and YouTube TV on the Roku platform. Roku had pulled the YouTube TV app from its channel store back in April after the companies failed to agree on terms for the online-cable service, but now they appear to be on better footing.
The two companies have “agreed to a multi-year extension for both YouTube and YouTube TV,” a Roku spokesperson said Wednesday. The arrangement is “a positive development for our shared customers, making both YouTube and YouTube TV available for all streamers on the Roku platform,” the spokesperson continued.
Terms of the deal weren’t disclosed.
Roku’s stock was up more than 18% in Wednesday afternoon trading and on track to log its largest single-day percentage gain since Aug. 8, 2019, when it added 20.9%. Shares of Alphabet were near flat.
Back in April, Roku maintained that it wasn’t seeking additional “financial consideration” through its YouTube TV negotiations, though the company said it was pushing back at requests from Google that it deemed “anticompetitive.” Google said at the time that it was looking to renew the YouTube TV agreement under “existing reasonable terms” and denied that it made requests “to access user data or interfere with search results.”
Wells Fargo analyst Steven Cahall wrote in a late November note to clients that he thought investors were “concerned about core YouTube falling off of Roku at some point” as tensions escalated over YouTube TV.
Even with Wednesday’s rally, shares of Roku are off 23% over the past three months, as the S&P 500
has risen about 4%.