2 Stocks Swinging on PlayStation 5 Buzz

EA is finding support at its 80-day moving average

Apr 16, 2019 at 1:56 PM
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The U.S. stock market is higher today, thanks to a dovish Fed and well-received Johnson & Johnson (JNJ) earnings. Among other stocks making notable moves are chipmaker Advanced Micro Devices, Inc. (NASDAQ:AMD), "Battlefield V" creator Electronic Arts Inc. (NASDAQ:EA), and streaming name Roku Inc (NASDAQ:ROKU). Here's a quick look at what's moving the shares of AMD, EA, and ROKU.

AMD Stock Seems Ripe for Bull Notes

Advanced Micro Devices stock has shot up 2.7% to trade at $28.08, after a Wired report indicated AMD chips are "at the heart of" Sony's (SNE) PlayStation 5. This positive price action is just more of the same for a security that's up 52% so far in 2019. And while the shares have pulled back from their April 3 year-to-date (YTD) high of $29.95, they have found a foothold atop their rising 20-day moving average.

A round of overdue bull notes could keep the wind at AMD stock's back. While half of the 20 covering analysts continue to maintain a "hold" or "strong sell" rating on the outperformer, the average 12-month price target of $25.29 is a discount to current trading levels.

EA Stock Hit By News of an Origin Bug

Buzz about the latest PlayStation iteration and reports of a potential security flaw are weighing on Electronic Arts today. More specifically, EA stock is down 4% at $93.93, after TechCrunch reported on a bug in the company's Origin online gaming platform that left users vulnerable to hackers. The issue has already been fixed.

EA stock has been charting a series of lower highs since hitting its YTD peak of $108.80 on Feb. 15. However, the video game stock remains up 19.1% on the year, and is finding support at its 80-day moving average. Several options traders are likely hoping for a big bounce from here. The June 110 call is home to peak open interest on EA, and data from the major options exchanges confirms buy-to-open activity here.

Analyst: Disney+ Could Be Big Driver for Roku

Needham reiterated its bullish outlook on Roku, with analyst Laura Martin maintaining her "buy" rating and $85 price target, and calling the stock a top pick for 2019. Plus, Martin said the launch of Walt Disney's (DIS) Disney+ streaming service this fall could be the "next $1 billion upside driver" for Roku.

It's been a tough month for the stock, down 10.5% so far. However, the selling appears to have stalled near ROKU's 60-day moving average, and the shares are still boasting an 88% YTD lead, last seen trading up 2% at $57.74.

Short sellers have been hitting the bricks amid this longer-term surge, with short interest dropping 40% between the mid-January and late-March reporting periods. ROKU is still heavily shorted, though, considering the 8.7 million shares still held by bears represents 11.4% of the stock's available float.


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