Roku (ROKU) AI Stock Analysis

• Market Cap: $8.07B
• Dividend Yield: N/A
• Average Volume (3M): 3.95M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.85
• Revenue Growth: 18.03%
• EPS Growth: 82.15%
• Country: US
• Employees: 3,340
• Sector: Communication Services
• Sector Strength: 74
• Industry: Entertainment
• EPS (TTM): -0.90
• Shares Outstanding: 128,740,390
• 10 Day Avg. Volume: 3,857,749
• 30 Day Avg. Volume: 3,946,714
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.78
• Price to Cash Flow (P/CF): 36.00
• P/FCF Ratio: 36.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $103.17
• Price Target Upside: 86.63% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 24

Roku's overall stock score reflects a balance between strong growth potential and significant profitability challenges. The company's positive cash flow management and stable balance sheet provide a foundation for future growth. However, technical indicators suggest cautious optimism, and valuation metrics highlight the need for improved profitability. The favorable earnings call adds a positive outlook for 2025, contributing to the overall score.

Positive Factors

Distribution and Partnerships

Walmart began selling Roku-branded TVs in its retail stores, which can contribute to improved distribution.

Platform Growth

Roku's Platform growth significantly exceeded expectations, demonstrating its strong performance and potential for future growth.

Viewership Growth

The Roku Channel accounted for an all-time high of 4.9% of U.S. streaming time, showing significant growth in viewership.

Negative Factors

Decline in Listings

Roku’s share of TV listings on Amazon and Best Buy declined, although this is not considered a structural change.

Market Share Challenges

Roku lost share of TV listings on Walmart and Best Buy as Vizio increased its presence.

Ongoing Challenges

Most of the negatives for Roku remain the same compared to the previous year, indicating ongoing challenges.

Roku Business Overview & Revenue Model

Company Description

Roku, Inc., together with its subsidiaries, operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live TV, news sports, shows, and others. As of December 31, 2021, the company had 60.1 million active accounts. It also provides digital and video advertising, content distribution, subscription, and billing services, as well as other commerce transactions, and brand sponsorship and promotions; and manufactures, sells, and licenses smart TVs under the Roku TV name. In addition, the company offers streaming players, and audio products and accessories under the Roku brand name; and sells branded channel buttons on remote controls of streaming devices. It provides its products and services through retailers and distributors, as well as directly to customers through its website in the United States, Canada, the United Kingdom, France, Mexico, Brazil, Chile, Peru, North and South Americas, and Europe. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.

How the Company Makes Money

Roku generates revenue through a combination of hardware sales, platform services, and advertising. The company sells streaming players and licenses its Roku OS to TV manufacturers, earning revenue from each unit sold. A significant portion of Roku's revenue comes from its platform segment, which includes advertising sales, subscription and transaction revenue shares, and licensing fees. Roku partners with content providers to feature their channels on its platform, earning a share of subscription fees and pay-per-view transactions. Advertising is another critical revenue stream, as Roku sells ad space on its platform and through The Roku Channel, leveraging its large user base to attract advertisers seeking targeted and effective digital advertising solutions. Additionally, strategic partnerships with TV brands and content providers further enhance Roku's platform, contributing to its overall earnings.

Roku Financial Statement Overview

Summary

Roku's financial performance is marked by strong revenue growth but hindered by persistent profitability challenges. The company's balance sheet is stable, with a low debt-to-equity ratio, and cash flow management remains robust with significant free cash flow growth.

Income Statement

Roku has demonstrated strong revenue growth with a 18.04% increase in 2024. However, profitability remains a critical challenge as indicated by negative net profit margin (-3.15%) and EBIT margin (-5.31%). Despite these challenges, the company maintains a solid gross profit margin of 43.89%, showcasing operational efficiency.

Balance Sheet

Roku's balance sheet is sound with a manageable debt-to-equity ratio of 0.21 and a healthy equity ratio of 57.92%, indicating financial stability. However, the consistent negative net income affects the return on equity, which stands at -5.19%.

Cash Flow

The company shows robust cash flow management with a positive operating cash flow to net income ratio of 1.69 and a significant improvement in free cash flow, growing by 22.94% in 2024. This indicates strong liquidity and cash generation capabilities despite net losses.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.11B	3.48B	3.13B	2.76B	1.78B
	Gross Profit
1.81B	1.52B	1.44B	1.41B	808.22M
	EBIT
-218.17M	-792.38M	-530.89M	235.10M	-15.02M
	EBITDA
219.86M	-570.67M	-382.96M	313.21M	49.93M
	Net Income Common Stockholders
-129.39M	-709.56M	-498.00M	242.38M	-17.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.16B	2.03B	1.96B	2.15B	1.09B
	Total Assets
4.30B	4.26B	4.41B	4.08B	2.27B
	Total Debt
512.71M	654.27M	664.64M	484.59M	402.68M
	Net Debt
-1.65B	-1.37B	-1.30B	-1.66B	-690.14M
	Total Liabilities
1.81B	1.94B	1.77B	1.32B	942.53M
	Stockholders Equity
2.49B	2.33B	2.65B	2.77B	1.33B
Cash Flow		Free Cash Flow
212.98M	173.24M	-149.90M	188.04M	65.81M
	Operating Cash Flow
218.04M	255.86M	11.79M	228.08M	148.19M
	Investing Cash Flow
-25.06M	-92.62M	-201.70M	-176.82M	-81.32M
	Financing Cash Flow
-89.20M	-61.24M	8.36M	1.00B	509.05M

Roku Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 55.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROKU, the sentiment is Negative. The current price of 55.28 is below the 20-day moving average (MA) of 71.29, below the 50-day MA of 79.29, and below the 200-day MA of 72.28, indicating a bearish trend. The MACD of -1.98 indicates Negative momentum. The RSI at 41.21 is Neutral, neither overbought nor oversold. The STOCH value of 26.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ROKU.

Roku Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	82 Outperform	$21.61B	10.64	20.09%	1.08%	4.29%	177.70%
DIS	76 Outperform	$151.00B	27.12	5.54%	1.14%	3.97%	89.53%
WMG	74 Outperform	$15.34B	30.25	100.20%	2.41%	0.75%	9.36%
NFLX	74 Outperform	$366.10B	43.16	38.43%	―	15.28%	65.72%
ROKU	67 Neutral	$8.07B	―	-5.37%	―	18.03%	82.15%
Sector *	58 Neutral	$25.04B	3.12	-9.31%	4.26%	2.35%	-43.03%
WBD	58 Neutral	$19.81B	―	-28.54%	―	-4.91%	-259.71%

Roku Corporate Events

Roku Director Ravi Ahuja Resigns Amid Sony Commitments

On March 25, 2025, Ravi Ahuja informed Roku’s Board of Directors of his decision to resign as a director, effective June 11, 2025, due to his commitments as President and CEO of Sony Pictures Entertainment. His departure is not due to any disagreements with Roku, and the board will reduce its size from nine to eight members following his resignation.