Latest news with #RokuInc
Globe and Mail
2 days ago
- Business
- Globe and Mail
Is Roku's Strategy for Devices Segment Holding Back Its Profitability?
Roku 's ROKU Devices segment remains a challenging part of the business, acting more as a strategic tool to grow its user base than as a source of profitability. While devices are essential for expanding Roku-powered households, the segment continues to face financial strain, with persistent losses and margin pressure. Roku maintains that its priority is growing its streaming footprint, even at the cost of short-term Devices profits. These trends are expected to continue. For the second quarter of 2025, Roku projects Devices revenues to decline around 10% year over year, with margins staying negative. To manage macro and tariff-related risks, the company is leaning on its diversified manufacturing and flexible pricing. The Zacks Consensus Estimate for Roku's second quarter 2025 revenues of the Devices segment is pegged at $124.42 million and the estimate for the gross loss of the segment is pegged at $14.06 million. To improve brand appeal and deepen engagement, Roku recently launched a refreshed device lineup. The updated Roku-made TVs feature better picture and sound quality, faster app launches and deeper bass. The new Pro Series introduces QLED and Mini-LED technology, along with an upgraded Voice Remote Pro and software features like Smart Picture and personalized Backdrops. Despite similar efforts in the past, profitability remains elusive. In the first quarter of 2025, Devices revenues rose 11% year over year to $140 million (13.7% of total revenues), but the segment posted a gross loss of $19 million and a negative 14% margin due to lingering holiday promotions. While unit sales were strong, the Devices business continues to function as a long-term strategic lever rather than a near-term profit engine. Roku's Competition in This Space Several players are competing with Roku's devices business, with companies like Amazon AMZN and Apple AAPL offering alternative streaming hardware and expanding their user ecosystems. Amazon continues to expand its Fire TV lineup, combining affordability with Alexa integration to drive adoption. Amazon's Fire TV devices remain a key part of its strategy to increase engagement within its content and services ecosystem. Apple's premium Apple TV 4K appeals to users seeking a high-performance experience with seamless integration into the Apple ecosystem. Apple continues to attract loyal users through tight ecosystem linkages and exclusive content. Roku's Share Price Performance, Valuation and Estimates ROKU shares have gained 10.3% in the trailing three months, outperforming the Zacks Broadcast Radio and Television industry's return of 22% but underperforming the Zacks Consumer Discretionary sector's growth of 10.6%. ROKU's 3-Month Price Performance Image Source: Zacks Investment Research From a valuation standpoint, ROKU stock is currently trading at a Price/Cash Flow ratio of 36.19X compared with the industry's 32.97X. ROKU has a Value Score of D. ROKU Valuation Image Source: Zacks Investment Research The Zacks Consensus Estimate for second-quarter 2025 loss is pegged at 15 cents per share, which has remained steady over the past 30 days, indicating 37.5% year-over-year growth. The consensus mark for 2025 loss is pegged at 17 cents per share, which has remained steady over the past 30 days. The estimate indicates 80.9% year-over-year growth. Roku currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Roku, Inc. (ROKU): Free Stock Analysis Report
Yahoo
08-06-2025
- Business
- Yahoo
Is Roku Stock a Long-Term Buy?
Roku's earnings are negative by design, as the company focuses on user growth. Roku's price-to-sales and price-to-book ratios suggest the stock is more than reasonably affordable. This growth stock has a long way to run. 10 stocks we like better than Roku › At first glance, Roku (NASDAQ: ROKU) looks like a terrible investment. Earnings are negative. Sales are rising, but much more slowly than they were four years ago. The stock trades at an unaffordable valuation of 125 times forward earnings estimates. After a long-forgotten price spike in the pandemic lockdown era, Roku's stock fell hard and then traded sideways over the last three years. But if you look a bit closer, you should see a healthy long-term growth story in play. Roku targets a huge global market, following in the footsteps of proven winners, and the stock doesn't appear expensive at all from other perspectives. It's actually one of my favorite stocks to buy in 2025, and Roku should be a helpful addition to long-term portfolios. Let me deconstruct the scary qualities I mentioned above. Roku's red-ink earnings are at least partly a voluntary choice. The company treats its streaming hardware as a marketing tool, selling Roku sticks and TV sets below the manufacturing and distribution costs. This user-growth tactic is especially unprofitable in Roku's highest-volume sales periods. The holiday quarter of 2024, for example, nearly quadrupled the devices segment's negative gross margin from 7.6% in the third quarter to 28.6% in the fourth. In other words, Roku is running its business with unprofitable profit margins to maximize its market reach and user growth. Furthermore, I'm talking about generally accepted accounting principles (GAAP), which is the standard accounting method used for calculating taxes. Roku often posts negative GAAP earnings that result in tax refunds rather than expenses. At the same time, free cash flows tend to land on the positive side with modest cash profits. That's just efficient accounting powered by stock-based compensation and amortization of Roku's media-streaming content library. Roku's year-over-year sales growth has averaged 14.7% over the last two years. That's a sharp retreat from 40.9% in the three years before that. But don't forget that the extreme growth was driven by the COVID-19 pandemic. Lots of people turned to digital media during the lockdown period, resulting in a unique business spike for companies like Roku and Netflix (NASDAQ: NFLX). The pandemic also happened to take place just months after Walt Disney (NYSE: DIS) launched the Disney+ streaming service, inspiring a torrent of copycat service launches. Long story short, there may never be a media market like the one in 2020-2021 again. Holding on to nearly half of that nitro-boosted growth rate in recent years is actually really good. Let me point back to the voluntary GAAP losses. Roku isn't trying to generate huge taxable profits at this time, which makes price-to-earnings (P/E) ratios largely unusable. Even the forward-looking version of this common metric relies on Roku's guidance targets filtered through Wall Street's analysis. If anything, the analyst community's projections are more optimistic than Roku's official targets. Management expects a $30 million GAAP loss in fiscal year 2025, which would work out to another "not applicable" P/E ratio. If you look at other valuation metrics, Roku starts to look like a bargain. Trading at 2.6 times trailing sales, the stock is comparable to slow-growth giants such as Caterpillar or Unilever. Roku also seems undervalued, if you base your analysis on its robust balance sheet, with a price-to-book ratio of 4.4 and a price-to-cash multiple of 4.9. I'll admit that Roku's stalled stock chart can be frustrating. Share prices are down 17% over the last three years, missing out on 44% growth in the S&P 500 (SNPINDEX: ^GSPC) market index. Roku's sales are up 45% over this period, while free cash flow rose by 66%. When will the big payoff come, rewarding patient shareholders for Roku's quiet success? That's OK, though. Keeping stock prices low just gives investors more time to build those Roku positions. I have bought Roku more often than any other stock since the spring of 2022, and I might not be done adding shares yet. Whenever I have spare cash ready for investments, Roku pops up as a top idea. That remains true in June 2025. So, let the chart slouch lower. Affordable buy-in prices can set you up for tremendous long-term returns. Before you buy stock in Roku, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Roku wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Anders Bylund has positions in Netflix, Roku, and Walt Disney. The Motley Fool has positions in and recommends Netflix, Roku, and Walt Disney. The Motley Fool recommends Unilever. The Motley Fool has a disclosure policy. Is Roku Stock a Long-Term Buy? was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
28-05-2025
- Business
- Globe and Mail
Roku Stock Plunges 10% in 3 Months: Should You Buy the Dip or Wait?
Roku ROKU shares have lost 10.3% in the trailing three months, underperforming the Zacks Consumer Discretionary sector and the Zacks Broadcast Radio and Television industry's growth of 2.6% and 14.4%, respectively. The dip in Roku's shares can be attributed to investor concerns around potential tariff impacts on the company's Devices segment. Although Roku's TV unit sales might decline slightly as a possible outcome of tariffs, it is unlikely to hurt the company's market share. Roku has a diversified manufacturing strategy. It manufactures in multiple countries, which provides the company with agility and flexibility to help mitigate the effects of tariffs. Additionally, the company has already implemented some minor price adjustments and it does not expect any significant change to its gross profit in the Devices segment. If TV prices rise due to tariffs and consumer demand dips, Roku's streaming players offer an easy, affordable way for users to upgrade and extend the life of their existing TVs without needing to invest in a new one. ROKU's 3 Month Price Performance Roku Benefits From Frndly TV Acquisition On May 2, Roku announced that it had entered into an agreement to acquire Frndly TV. This acquisition is a strategic step to expand its subscription offerings and deepen user engagement on its platform. Frndly TV is a fast-growing 'skinny bundle' service with a loyal viewer base. It offers popular linear channels like Hallmark, Lifetime and A&E, which are genres that strongly resonate with traditional TV audiences, making the shift to streaming. Roku sees Frndly TV not just as a content addition but as a growth asset. The acquisition is expected to be EBITDA-margin accretive in its first full year, signaling financial upside alongside strategic value. What makes the deal particularly synergistic is Roku's ability to scale Frndly TV across its ecosystem. By embedding it into its platform, Roku will enhance both its content bundle and advertising proposition. Roku's Ad Business Grows Amid Fierce Competition Roku operates in a highly competitive advertising industry and competes for revenues with other companies that have launched ad-supported streaming. Some of these companies include Netflix NFLX, Warner Bros. Discovery WBD and Disney DIS. Since its launch, Netflix's ad-supported tier reached 70 million global monthly users as of late 2024, while Warner Bros. Discovery expanded its ad-supported tier on Max to more than 45 countries in the past 15 months. As of January this year, Disney had approximately 157 million global monthly active users watching ad-supported content across its streaming platforms. Shares of Netflix have returned 24.4% in the trailing three months, while Warner Bros. Discovery and Disney have lost 13.3% and 0.3%, respectively. Despite this pressure, Roku's ad-supported streaming business continued to deliver strong momentum in the first quarter of 2025, driven by its expanding platform scale and innovative advertising strategies. Platform revenues grew 17% year over year to $881 million, supported by both video advertising and streaming services distribution. Roku's reach now exceeds half of all U.S. broadband households, with its Home Screen serving as the lead-in for TV for more than 125 million people daily. The Roku Channel became the #2 app on the platform by engagement, with streaming hours up 84% year over year and more than 85% of viewing occurring through Roku's curated interface. Ad activities outside the Media & Entertainment vertical outperformed the U.S. OTT ad market, aided by integrations with Adobe and INCRMNTAL. With tools like Roku Ads Manager and flexible buying options, Roku continues to solidify its standing in the ad-supported streaming space. Roku Reaffirms Guidance for 2025 For 2025, Roku reaffirmed its guidance for Platform revenues of $3.95 billion and adjusted EBITDA of $350 million. Platform gross margin is expected to be approximately 52%. Devices revenues and gross profit are expected to remain consistent with 2024 levels. The Zacks Consensus Estimate for 2025 total revenues is pegged at $4.55 billion, suggesting year-over-year growth of 10.54%. The consensus mark for 2025 loss is pinned at 17 cents per share, which has narrowed by 39.3% over the past 30 days, indicating growth of 80.9% from the figure reported in the year-ago quarter. Roku's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 51.15%. Although the company's price-to-cash flow ratio of 33.94X is slightly ahead of the Zacks Broadcast Radio and Television industry average of 32.98X, this premium valuation reflects investor confidence in the company's growth potential for the rest of 2025. ROKU's Price/Cash Flow Ratio Here's Why You Should Buy ROKU Stock Despite the recent share price pressure, Roku's long-term outlook remains strong. The company continues to grow its platform revenues, expand user engagement and innovate across advertising and content. Its acquisition of Frndly TV adds strategic depth to its subscription offerings, while its diversified manufacturing strategy helps mitigate tariff risks. With a promising 2025 guidance, rising ad momentum and strong performance from The Roku Channel, Roku is well-positioned to thrive in a competitive streaming landscape. As it scales its platform and improves monetization, Roku offers solid growth potential for investors looking beyond market headwinds. ROKU currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report Warner Bros. Discovery, Inc. (WBD): Free Stock Analysis Report Roku, Inc. (ROKU): Free Stock Analysis Report
Yahoo
03-05-2025
- Business
- Yahoo
Why Roku, Inc. (ROKU) Went Down On Friday
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 Friday's worst performers. Wall Street's major indices ended the trading week on a strong note, clocking in robust gains as investors cheered better-than-expected non-farm payrolls last month while digesting more corporate earnings results. The tech-heavy Nasdaq led the rally among all major indices, finishing up 1.51 percent. The S&P 500 clocked in a 1.47-percent gain, while the Dow Jones grew by 1.39 percent. Despite the broader market optimism, 10 companies managed to register declines amid dismal earnings performance in the first quarter of the year. In this article, let us explore Friday's 10 worst performers and the reasons behind their decline. To come up with the list, we considered only the stocks with a $2-billion market capitalization and $5-million trading volume. A large movie theatre filled with people enjoying a film streaming on a smart TV. Roku, Inc. (NASDAQ:ROKU) Roku Inc. dropped its share prices by 8.5 percent on Friday to close at $61.55 apiece as investors shunned the company's strong earnings performance for the first quarter of the year. In its latest earnings release, Roku, Inc. (NASDAQ:ROKU) said that net loss narrowed by 46 percent to $27.4 million from $50.8 million in the same period a year earlier. Net revenues increased by 15.77 percent to $1.02 billion from $881 million year-on-year. Looking ahead, the company expects net loss to further shrink to $25 million in the second quarter and end at $30 million in full-year 2025. Net revenues are expected to settle at $1.07 billion in the current quarter and at $4.55 billion for the full-year period. 'We remain vigilant and adaptable as market conditions evolve. While uncertainty remains, we are confident in our strategy and continue to see a path to achieving positive operating income in 2026,' said Roku, Inc. (NASDAQ:ROKU). Overall, ROKU ranks 8th on our list of Friday's worst performers. While we acknowledge the potential of ROKU as an investment, our conviction lies in the belief that 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. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
24-03-2025
- Business
- Yahoo
Why Roku Inc. (ROKU) Went Up Last Week?
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 last week's best-performing stocks. Ten firms outperformed Wall Street's three major indices over the past week, clocking in double-digit gains on the back of a flurry of company developments that sparked buying appetite. On a week-on-week basis, the Dow Jones rallied by 1.19 percent, the S&P 500 increased 0.5 percent, and the tech-heavy Nasdaq inched up 0.16 percent. Meanwhile, 10 firms finished stronger with gains of 10 to 20 percent. In this article, let's explore the names of last week's best performers and the reasons behind their rallies. To come up with the list, we only considered the stocks with at least a $2 billion market capitalization and $5 million in trading volume. A large movie theatre filled with people enjoying a film streaming on a smart TV. Roku Inc. (NASDAQ:ROKU) Roku Inc. increased its share price by 15.5 percent week-on-week to end Friday's trading at $78.29 versus the $67.78 on March 14 following its partnership with Monster Jam to add its FAST channel to its platform. Under the agreement, ROKU will bring Monster Jam trucks, stunts, and races for free to millions of households across the US. The Monster Jam channel will feature a vast selection of content from 20 years of its TV shows, including the current season with full event replays, behind-the-scenes access, and exclusive interviews with champion drivers. Meanwhile, ROKU recently earned a 'buy' rating from Guggenheim Securities, saying that it believes the company will exit the year 'at its strongest' level amid expectations of continued improvements. 'Specifically, we believe actions including improved focus on monetization-based operating metrics, broadening third-party partnerships, and expanding revenue-generating offerings while incrementally focusing on profitability and free cash flow generation are driving a more valuable enterprise,' it said. Overall, ROKU ranks 5th on our list of last week's best-performing stocks. 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. If you are looking for an AI stock that is as promising as ROKU but trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey.
