Roku (ROKU) AI Stock Analysis

• Market Cap: $10.12B
• Dividend Yield: N/A
• Average Volume (3M): 4.18M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.70
• Revenue Growth: 17.30%
• EPS Growth: 81.72%
• Country: US
• Employees: 3,340
• Sector: Communication Services
• Sector Strength: 89
• Industry: Entertainment
• EPS (TTM): -0.19
• Shares Outstanding: 129,534,450
• 10 Day Avg. Volume: 3,563,472
• 30 Day Avg. Volume: 4,175,973
• PEG Ratio: -4.68
• Price to Book (P/B): 3.53
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 29.42
• Enterprise Value/Market Cap: 0.71
• Enterprise Value/Revenue: 0.45
• Enterprise Value/Gross Profit: 3.90
• Enterprise Value/Ebitda: -14.97
• 1Y Price Target: $85.55
• Price Target Upside: 23.97% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 22

• Rating: 70 Outperform
• Price Target: $76.00 ▲( 10.13% Upside)

Roku's overall stock score is bolstered by strong revenue growth and strategic earnings call highlights, underscoring its potential for future profitability. However, persistent net losses and valuation concerns due to a negative P/E ratio temper the outlook. Technical indicators suggest a cautiously optimistic market sentiment.

Positive Factors

Acquisition Impact

The announcement of the Frndly TV acquisition is expected to contribute approximately 200 basis points to revenue.

Financial Performance

Roku reported solid 1Q results, with revenues driven by healthy growth in platform revenue and devices, which were both ahead of forecasts.

Free Cash Flow

Roku is projected to achieve a positive free cash flow exceeding $200 million.

Negative Factors

Advertising Revenue

There is a risk to sustaining current Platform segment advertising revenue growth over time due to an increasingly competitive CTV industry.

Economic Risks

There is potential downside risk if macroeconomic conditions deteriorate.

Roku Business Overview & Revenue Model

Company Description

Roku, Inc. is a leading streaming platform in the United States, specializing in the provision of streaming services and devices. The company operates within the technology and entertainment sectors, offering a variety of products, including streaming players and TV-related audio devices. Roku's platform allows users to access a wide range of content, including movies, TV shows, live news, sports, and more, by connecting directly to streaming services over the internet.

How the Company Makes Money

Roku primarily generates revenue through three key streams: platform revenue, player revenue, and advertising. Platform revenue is derived from licensing fees paid by content providers, subscription and transaction fees from premium content, and advertising sales on the Roku platform. Player revenue comes from the sale of Roku streaming devices, including streaming players and Roku TVs. Advertising, a significant component of platform revenue, includes revenue from video advertisements, audience development promotions, and digital advertising via the Roku Channel and other streaming services. Partnerships with content providers, advertisers, and smart TV manufacturers further contribute to Roku's earnings, enabling the company to expand its user base and content offerings.

Roku Financial Statement Overview

Summary

Roku exhibits strong revenue growth and cash flow improvements, positioning it well in the entertainment industry. However, persistent net losses and negative profit margins highlight ongoing challenges in achieving profitability. The company's balance sheet remains strong, with low leverage and a solid equity base, but inefficiencies in capital utilization persist.

Income Statement

Roku's revenue has shown consistent growth, increasing from $1.78 billion in 2020 to $4.25 billion in TTM (Trailing-Twelve-Months) 2025. The company achieved a gross profit margin of 43.21% in TTM, indicating efficient cost management. However, the net profit margin remains negative at -24.92%, primarily due to continuous operating losses. Despite improvements, the EBIT and EBITDA margins are still negative, indicating challenges in achieving operational profitability.

Balance Sheet

Roku maintains a solid equity position with an equity ratio of 60.42% in TTM 2025, showcasing a stable capital structure. The debt-to-equity ratio is relatively low at 0.20, reflecting a conservative approach to leveraging. Despite this, the company has struggled to generate positive returns, as indicated by the negative ROE of -4.20%, suggesting inefficiencies in utilizing equity capital for profit generation.

Cash Flow

Roku has demonstrated strong free cash flow growth, with a significant increase in free cash flow from -$149.9 million in 2022 to $303.77 million in TTM 2025. The operating cash flow to net income ratio is robust, indicating effective cash management. The positive shift in free cash flow signals improved operational efficiency and financial health, although ongoing net losses remain a concern.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.25B	4.11B	3.48B	3.13B	2.76B	1.78B
	Gross Profit
1.84B	1.81B	1.52B	1.44B	1.41B	808.22M
	EBIT
-193.18M	-218.17M	-792.38M	-530.89M	235.10M	-15.02M
	EBITDA
30.36M	196.91M	-570.67M	-382.96M	313.21M	49.93M
	Net Income Common Stockholders
-105.96M	-129.39M	-709.56M	-498.00M	242.38M	-17.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.06B	2.16B	2.03B	1.96B	2.15B	1.09B
	Total Assets
4.15B	4.30B	4.26B	4.41B	4.08B	2.27B
	Total Debt
568.63M	591.93M	654.27M	664.64M	484.59M	402.68M
	Net Debt
-1.49B	-1.57B	-1.37B	-1.30B	-1.66B	-690.14M
	Total Liabilities
1.80B	1.81B	1.94B	1.77B	1.32B	942.53M
	Stockholders Equity
2.36B	2.49B	2.33B	2.65B	2.77B	1.33B
Cash Flow		Free Cash Flow
303.77M	212.98M	173.24M	-149.90M	188.04M	65.81M
	Operating Cash Flow
310.09M	218.04M	255.86M	11.79M	228.08M	148.19M
	Investing Cash Flow
-33.32M	-25.06M	-92.62M	-201.70M	-176.82M	-81.32M
	Financing Cash Flow
-111.33M	-89.20M	-61.24M	8.36M	1.00B	509.05M

Roku Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 69.01
• 50DMA: Positive
• 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 69.01 is above the 20-day moving average (MA) of 67.07, above the 50-day MA of 66.61, and below the 200-day MA of 73.19, indicating a neutral trend. The MACD of 1.35 indicates Negative momentum. The RSI at 53.81 is Neutral, neither overbought nor oversold. The STOCH value of 57.05 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	81 Outperform	$23.66B	13.69	16.89%	0.98%	15.70%	26.73%
DIS	78 Outperform	$197.25B	22.41	8.75%	0.86%	5.33%	431.28%
NFLX	75 Outperform	$504.47B	56.01	40.84%	―	14.11%	47.22%
ROKU	70 Outperform	$10.12B	―	-4.34%	―	17.30%	81.72%
WMG	64 Neutral	$13.67B	30.47	89.20%	2.71%	-0.91%	-14.87%
Sector *	61 Neutral	$14.08B	5.95	-4.18%	3.68%	2.79%	-36.29%
WBD	56 Neutral	$22.27B	―	-27.69%	―	-5.58%	-254.85%

Roku Corporate Events

Roku Announces Resignation of Senior VP Louise Pentland

On May 1, 2025, Roku announced that Louise Pentland, their Senior Vice President and General Counsel, will resign effective May 16, 2025, to pursue another opportunity. Her resignation is not due to any disagreements with the company or its board, and Roku plans to conduct an executive search for her successor.

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.