Roku, Inc. (ROKU): Among Advertising & Media Stocks That Could Tank If Recession Hits

Yahoo

13-05-2025

We recently published a list of . In this article, we are going to take a look at where Roku, Inc. (NASDAQ:ROKU) stands against other advertising & media stocks that could tank if recession hits.
When recession strikes, the advertising and media sectors are the first ones to see a noticeable impact. Companies tend to reduce their advertising budgets when the going gets tough. As a result, media companies that rely heavily on advertising spending fail to hit their revenue targets. So, if investors want to look at red flags for recession, advertising and media stocks offer good insights.
While media companies across the board feel the heat of reduced advertising budgets, some companies tend to fare better. These are mostly the ones that have diversified their income streams to reduce reliance on advertising.
In this post, we look at stocks that are likely to struggle if ad spending goes down. To come up with our list of top 10 advertising and media stocks that could tank if recession hits, we only looked at stocks that had a market cap of at least $5 billion.
A large movie theatre filled with people enjoying a film streaming on a smart TV.
Roku, Inc. is a TV streaming platform operator. It operates in the Devices and Platform segments. The company's streaming platform enables users to access and find news, TV shows, sports, movies, and similar content. It offers streaming services distribution, digital advertising, sale of streaming players, audio products, and other products and services.
Last month, the firm was upgraded by Bank of America (BofA) with a Buy rating and a price target of $100. The upgrade was based on the company's strong user base and its growth potential.
Brent Navon, BofA Securities analyst, highlighted the company's profitability trajectory by saying:
We believe Roku provides an attractive combination of top-line growth, margin expansion, and scaling free cash flow generation
The company's streaming market share has been growing steadily, and with it, the advertising revenue as well. Like a handful of other streaming stocks, ROKU's bull thesis also relies on its advertising revenue, and once investors start seeing that slow down, the stock could fall even further.
Overall, ROKU ranks 1st on our list of advertising & media stocks that could tank if recession hits. While we acknowledge the potential of ROKU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ROKU but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.