Roku Shares Tumble Amid Apple TV+ Pricing News

Apple CEO Tim Cook delivers the keynote address during an Apple special event on September 10, 2019 - Getty-H 2019
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Netflix and Disney shares also dropped as Apple unveiled its streaming service plans Tuesday.

Shares of Roku were taking it on the chin Tuesday as investors reacted to news that Apple will launch its long-awaited streaming service for just $5 a month, a price that undercuts Netflix and Disney, whose shares also dropped.

In midday trading, Roku was off 9 percent while Netflix and Disney were down about 3 percent each. Apple TV+ is set to launch Nov. 1, while Disney+, at $7 monthly, has a Nov. 12 target date, and each are gearing up for competition with Netflix, the worldwide leader in premium subscription streaming that costs about twice what Disney will charge.

While Roku offers its own streaming content, it also serves as a gateway to other services, including Netflix and, eventually, Apple TV+, which makes the falling stock a bit of a head-scratcher, though investors may simply be looking for an excuse to take profits since Roku shares have surged 60 percent since its earnings report a month ago. Apple also is still largely a product company, and news that it will entice people to buy new devices (iPhones, iPads, Macs and Roku competitor Apple TVs) by offering a free year of TV+ could help explain the Roku stock slump.

Analysts have speculated for months that Apple would launch its product at a low price, given it has lots of catching up to do and it will be doing so with a relatively small amount of original content. On that front, Apple will have The Morning Show, starring Jennifer Aniston and Reese Witherspoon; Dickinson, starring Hailee Steinfeld; See, with Jason Momoa; a space drama called For All Mankind; and a slew of children's shows, such as Snoopy in Space. Apple also has deals for projects from Steven Spielberg, Oprah Winfrey and J.J. Abrams.

Apple on Tuesday announced the $5 price tag at an event in Cupertino, California, where it also revealed its iPhone 11, a suite of smartphones with improved cameras that will cost from $699-$1,099, depending on the model.

Shares of Apple also dropped on Tuesday, though less than 1 percent, as investors presume the Apple+ product will be a money loser for the foreseeable future.