Roku (ROKU) AI Stock Analysis

• Market Cap: $14.12B
• Dividend Yield: N/A
• Average Volume (3M): 4.13M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.67
• Revenue Growth: 17.32%
• EPS Growth: 87.79%
• Country: US
• Employees: 3,340
• Sector: Communication Services
• Sector Strength: 95
• Industry: Entertainment
• EPS (TTM): 0.07
• Shares Outstanding: 130,251,570
• 10 Day Avg. Volume: 3,054,815
• 30 Day Avg. Volume: 4,129,061
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.81
• Enterprise Value/Revenue: 2.61
• Enterprise Value/Gross Profit: 5.93
• Enterprise Value/Ebitda: 35.72
• 1Y Price Target: $104.05
• Price Target Upside: 7.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

• Rating: 77 Outperform
• Price Target: $101.00 ▲(3.96% Upside)

Roku's overall stock score is driven by strong financial performance, particularly in revenue growth and cash flow generation, despite profitability challenges. The positive earnings call and strategic initiatives like the Frndly acquisition and stock buyback program further enhance its outlook. Technical indicators show bullish momentum, although valuation concerns persist due to negative earnings.

Positive Factors

Market Positioning

Roku is positioned as a key beneficiary of the shift from linear TV to streaming, given its leading scale and engagement in the Connected TV market.

Platform Growth

Roku's high-teens Platform revenue growth is benefiting from its scaled position in a healthy connected TV ad market.

Revenue Growth

Roku reported a revenue growth of 18% in the second quarter, surpassing both management's guidance and investor expectations.

Stock Repurchase

Roku announced a $400 million stock repurchase program, reflecting strong cash flow and a robust cash balance.

Negative Factors

Competition

There is a risk of decelerating growth in 2026 as not priced in, due to rising competition in connected TV ad spend.

Investor Expectations

Roku shares fell 3% after hours, likely due to elevated investor expectations following strong results from competitors and a previous conservative outlook.

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 multiple streams: 1) Device Sales - The company sells streaming devices and smart TVs, contributing to its hardware revenue. 2) Advertising - Roku earns significant income from advertising on its platform, leveraging its audience data to attract advertisers. 3) Subscription Revenue - Through partnerships with various streaming services, Roku receives a share of subscription fees when users sign up for these services via its platform. 4) Platform Revenue - This includes revenue from services like Roku Channel, where Roku offers ad-supported content and earns ad revenue. The company also benefits from partnerships with content providers and advertisers, which enhance its revenue potential through targeted advertising and promotional deals.

Roku Financial Statement Overview

Summary

Roku displays robust revenue growth and strong cash flow generation, which are positive indicators of financial health. However, persistent net losses and negative EBIT margins suggest operational challenges. The balance sheet remains strong with low debt levels, but the negative ROE indicates difficulty in generating shareholder returns. Overall, Roku is in a stable financial position with room for improvement in profitability.

Income Statement

Roku has demonstrated strong revenue growth with a TTM of $4.39 billion, up from $3.48 billion in 2023, representing a 26.2% increase. However, profitability remains a concern as the TTM net profit margin is negative at -1.4%, indicating challenges in cost management or pricing strategy. The gross profit margin is healthy at 44%, but EBIT and EBITDA margins are negative, reflecting operational inefficiencies.

Balance Sheet

Roku maintains a solid equity position with a debt-to-equity ratio of 0.19, indicating low financial leverage. The equity ratio stands at 60.5%, showcasing a robust capital structure. However, the return on equity is negative at -2.4%, due to the negative net income, indicating potential issues in generating returns for shareholders.

Cash Flow

The company's free cash flow improved significantly to $389.85 million TTM, with a free cash flow growth rate of 83% from 2024, indicating strong cash generation capabilities. Operating cash flow to net income ratio is 6.4, suggesting effective conversion of income into cash. The free cash flow to net income ratio is also strong at 6.3.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.39B	4.11B	3.48B	3.13B	2.76B	1.78B
Gross Profit	1.94B	1.81B	1.52B	1.44B	1.41B	808.22M
EBITDA	321.04M	219.86M	-362.87M	-148.61M	408.78M	49.93M
Net Income	-61.51M	-129.39M	-709.56M	-498.00M	242.38M	-17.51M
Balance Sheet
Total Assets	4.28B	4.30B	4.26B	4.41B	4.08B	2.27B
Cash, Cash Equivalents and Short-Term Investments	2.25B	2.16B	2.03B	1.96B	2.15B	1.09B
Total Debt	567.16M	591.93M	654.27M	719.33M	521.71M	438.32M
Total Liabilities	1.69B	1.81B	1.94B	1.77B	1.32B	942.53M
Stockholders Equity	2.59B	2.49B	2.33B	2.65B	2.77B	1.33B
Cash Flow
Free Cash Flow	389.85M	212.98M	173.24M	-149.90M	188.04M	65.81M
Operating Cash Flow	396.42M	218.04M	255.86M	11.79M	228.08M	148.19M
Investing Cash Flow	-118.66M	-25.06M	-92.62M	-201.70M	-176.82M	-81.32M
Financing Cash Flow	-124.82M	-89.20M	-61.24M	8.36M	1.00B	509.05M

Roku Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 97.15
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROKU, the sentiment is Positive. The current price of 97.15 is above the 20-day moving average (MA) of 91.21, above the 50-day MA of 89.70, and above the 200-day MA of 78.62, indicating a bullish trend. The MACD of 2.78 indicates Negative momentum. The RSI at 61.25 is Neutral, neither overbought nor oversold. The STOCH value of 82.95 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ROKU.

Roku Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NFLX	80 Outperform	$515.91B	52.25	43.55%	―	14.28%	46.86%
DIS	78 Outperform	$212.84B	18.54	11.01%	0.85%	5.00%	144.65%
FOXA	78 Outperform	$25.92B	12.44	19.96%	0.92%	16.60%	57.39%
ROKU	77 Outperform	$14.12B	―	-2.47%	―	17.32%	87.79%
WMG	71 Outperform	$17.26B	58.58	54.66%	2.20%	1.36%	-45.79%
WBD	64 Neutral	$28.77B	39.47	2.18%	―	-3.79%	―
Sector *	60 Neutral	$43.83B	3.98	-12.77%	4.14%	1.86%	-42.71%

Roku Corporate Events

Roku Announces $400 Million Stock Buyback Program

On July 28, 2025, Roku‘s Board of Directors appointed Dan Jedda as both Chief Financial Officer and Chief Operating Officer, reflecting a strategic leadership consolidation. Additionally, on July 31, 2025, Roku announced a stock repurchase program authorizing the buyback of up to $400 million in Class A common stock, aiming to offset dilution from employee equity-based compensation and enhance shareholder value. The company reported strong financial performance in Q2 2025, with a 15% increase in total net revenue and an 18% rise in platform revenue, driven by video advertising and strategic acquisitions.

Roku Holds Annual Stockholders Meeting, Key Proposals Approved

On June 11, 2025, Roku, Inc. held its annual meeting of stockholders, where several key proposals were voted on. Stockholders elected Class II directors to serve until 2028, approved executive compensation, decided on an annual frequency for advisory votes on executive compensation, and ratified the appointment of Deloitte & Touche LLP as the independent accounting firm for 2025. These decisions reflect ongoing governance and operational strategies that may impact Roku’s corporate direction and stakeholder relations.