Roku Stock: Can This Streaming Pioneer Reignite Its Millionaire-Maker Potential?
Today, however, Roku trades at just around $64, marking a steep decline that has discouraged many early investors. That same $30,000 investment now sits around $137,000. A combination of slowing growth, increasing competition, and interest rate pressures have taken a toll on the stock’s valuation, making it a more divisive choice among investors.
Roku’s Diminished Bull Appeal: What Went Wrong?
Roku still dominates the North American streaming device market, but competition from Apple TV, Amazon Fire TV, Samsung, and other brands has intensified. To maintain its market share, Roku sells its hardware at a loss, hoping to recover costs through higher-margin revenue from its platform, which includes the Roku OS, ad-supported Roku Channel, and display ads.
During the pandemic, Roku experienced explosive growth, with people spending more time streaming and purchasing devices. However, by 2022 and 2023, this momentum faded. Macro headwinds and reduced consumer spending hindered Roku’s growth, while an increasingly fragmented market intensified competition. As a result, Roku’s active accounts and streaming hours increased, but its average revenue per user (ARPU) peaked in 2022 and subsequently declined in 2023, signaling a revenue slowdown.
| Year | Active Accounts (Millions) | Streaming Hours (Billions) | ARPU (TTM) | Revenue Growth |
|---|---|---|---|---|
| 2017 | 19.3 | 14.8 | $13.78 | 29% |
| 2018 | 27.1 | 24.0 | $17.95 | 45% |
| 2019 | 36.9 | 37.8 | $23.14 | 52% |
| 2020 | 51.2 | 58.7 | $28.76 | 58% |
| 2021 | 60.1 | 73.2 | $41.03 | 55% |
| 2022 | 70.0 | 87.4 | $41.68 | 13% |
| 2023 | 80.0 | 106.0 | $39.92 | 11% |
Source: Roku Inc.
Roku has invested heavily in new content, live sports contracts, and smart TVs to regain momentum. However, these growth initiatives, combined with slowing sales, have led to widening losses, causing many early investors to lose confidence in the stock.
Can Roku’s Growth Stabilize?
Despite headwinds, Roku’s growth metrics in 2024 show potential for stability. Over the first nine months of the year, active accounts rose 13% to 85.5 million, and streaming hours surged by 21% to 92.9 billion. While ARPU has steadied at $41.10, total revenue growth is up 16% year-over-year, a positive sign for those concerned about Roku’s long-term viability. The company now expects a 16% revenue increase for the full year, challenging the perception that Roku’s growth is losing steam.
Looking forward, analysts anticipate Roku’s revenue will grow at a 14% compound annual growth rate (CAGR) between 2023 and 2026. Although Roku’s revenue is slowing, it has also begun implementing cost-cutting measures, which have allowed it to report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow (FCF) for five consecutive quarters.
By 2026, analysts expect Roku’s adjusted EBITDA to reach $448 million, a significant improvement from just $4 million in 2023. With an enterprise value of $9.1 billion, Roku currently trades at a reasonable 2x forward sales and 31x adjusted EBITDA, making it a comparatively attractive investment for those who believe it can maintain its lead in the growing ad-supported streaming market.
Could Roku Still Be a Millionaire-Maker?
If Roku meets analyst expectations through 2026, grows its revenue steadily at a 14% CAGR over the next six years, and maintains its valuation multiple, the stock could rise 150% to approximately $160 per share by 2031. While that would deliver respectable returns for investors, it’s unlikely to reach the millionaire-making heights seen in its early years unless new investors are willing to commit over $400,000.
Given its significant growth potential in the free ad-supported streaming market—which Grand View Research projects to expand at a 23% CAGR from 2024 to 2030—Roku may offer attractive returns, albeit with more tempered expectations.
