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Roku, Inc. (ROKU)

Overvalued
Communication ServicesEntertainmentUnited States

Fundamental

68

Price

$151.71

Market Cap

$22.76B

Part 1 · What the company is worth

Overview

Roku makes the software that runs television sets and streaming players, then earns from what happens after the screen turns on. It licenses its Roku OS to TV manufacturers and sells its own branded players and TVs, largely at cost, to get into as many living rooms as possible. Once installed, its home screen sells advertising, promotes subscription services, and runs its own free channel. The hardware is the doorway; the software layer and the audience behind it are the business.

How it makes money

Revenue splits into two reportable segments. Platform revenue — advertising and subscriptions — is the business: Roku sells ad slots on its home screen and inside its own channel, takes a cut of third-party subscription services sold through its platform, and earns fees from content partners for placement and distribution deals. Devices revenue comes from selling streaming players and TVs, priced to maximize the number of active accounts rather than hardware profit. Platform revenue carries far higher margins and now generates the large majority of both revenue and gross profit.

Revenue by segment

Platform87.5%

Advertising on Roku's home screen and channel, subscription revenue share, and fees from content partners — the profitable core of the business.

Devices12.5%

Streaming players, Roku-branded TVs and accessories, sold near cost to expand the installed base that Platform revenue depends on.

Competitive moat

Network effects · Narrow

Roku's home screen is the largest streaming audience in North America, which is what draws advertisers and gets content partners to negotiate distribution deals on Roku's terms. But the same logic works against it: smart-TV makers, Amazon and Google are building their own operating systems and ad businesses, and a TV buyer only needs one platform, so the advantage erodes each time a rival wins a living room.

What drives demand

Cyclical

Roku's largest revenue line is advertising, which tracks marketer budgets: it slows when brands cut spending in a downturn and recovers when they don't. Subscription and content-distribution revenue is steadier, but still exposed to how much people are willing to pay for streaming services overall. Devices revenue follows consumer electronics spending and is markedly seasonal around the November-December holidays.

Key risks

  • Retail channel concentration for Devices — The company discloses that Amazon, Best Buy, Walmart and Target together generated 81% of Devices segment revenue in 2025. Losing shelf space or favorable terms with any one of them would hit hardware sales directly.
  • Rivals building their own ad platforms — Smart-TV makers and large technology companies are building competing operating systems and advertising businesses, some bundled directly into the television at manufacture, reducing the audience Roku can monetize.
  • Evolving privacy and data regulation — Roku's advertising business depends on tracking viewing behavior. Tightening privacy rules across the jurisdictions where it operates could restrict the data it can use to target and measure ads, its most profitable activity.
  • Concentrated around the holiday season — A large share of Devices sales, and the new accounts that feed future Platform revenue, happen in the November-December holiday window; a weak holiday season is difficult to make up later in the year.

The case for

Buyers argue that Roku's home-screen reach across North America gives it a durable advantage in TV advertising and subscription distribution that hardware rivals cannot easily replicate, and that Platform margins keep expanding as ad tools and owned streaming services mature.

The case against

Sellers worry that smart-TV makers and big technology platforms are building their own operating systems and ad businesses, that four retailers control most of Roku's hardware distribution, and that advertising revenue — Roku's main profit driver — is inherently exposed to marketing budget cuts.

Written by the editors, published on August 18, 2026

Direct competitors

Who this company fights with for the same customers

No editorial profile for this company yet

No competitor list for this company yet.

Balance Sheet & Liquidity

Revenue

$5.21B

Trailing 12 months (through 6/30/2026)

Net Income

$355M

Trailing 12 months (through 6/30/2026)

Free Cash Flow

$478M

Total Equity

$2.66B

Total Liabilities

$1.78B

Current Ratio

2.87

Interest Coverage

129.44

Debt/EBITDA

11.86

Earnings Per Share

Revenue & Net Income

Free Cash Flow

Income Breakdown

Historical statement

Margins over time

Debt over time

How heavy the debt is

Growth grid

Growth — Revenue

Fair Value Estimation

General caseOvervalued

Fair Value

$98.52

Current Price

$151.71

Margin of Safety

-54.0%

Fair Value Range

$64.04 - $133.00

Spread across the valuation methods used, not a statistically calibrated confidence interval.

Estimation Methods

Analyst price target:$162.33
Discounted cash flow (DCF):$31.11
Earnings multiple (P/E):$103.84
Graham growth formula:$38.42
Earnings power value (EPV):$8.69
Justified P/B:$13.85
Dividend discount (Gordon):Not enough data to compute it
P/FFO, funds from operations:$14.50
Mid-cycle earnings:Not enough data to compute it
Revenue multiple:$70.47
Analyst Consensus:Hold (14B / 22H / 0S)
Last Earnings Surprise:+97.08%

Valuation Metrics

P/E Ratio

64.53

ROE

3.3%

P/B Ratio

7.97

P/FCF

31.71

Gross Margin

45.5%

ROIC

6.5%

Profitability Radar

Value Creation (Economic Moat)

ROIC

6.5%

WACC

16.0%

ROIC − WACC

-9.5 pp

ROIC is below the cost of capital — the company is destroying value for every dollar invested.

Fundamental Analysis Criteria

Passed (18)

  • EPS shows upward trend
  • Price CAGR 12.83%
  • ROIC 6.5%
  • Gross Margin 45.5%
  • Debt/Equity ratio
  • Operating Margin 5.2%
  • Positive Free Cash Flow
  • CapEx intensity
  • Current Ratio
  • Interest Coverage
  • Return on Tangible Assets
  • Low reliance on intangibles
  • ROE 13.2%
  • Revenue Growth 5Y 21.6%
  • Earnings Surprise avg 84.7%
  • Earnings Quality (OCF/NI) 2.02
  • Net Margin Trend 6.8% vs -1.4%
  • Piotroski F-Score 7/9

Failed (7)

  • P/FCF 31.71
  • P/B Ratio 7.97
  • Debt/EBITDA
  • Price below Graham Number
  • DCF valuation (Overvalued)
  • Analyst Consensus 39% Buy
  • Share Dilution 3.0%

Unavailable (2)

  • Dividend Payout NaN%
  • PEG Ratio (need PE > 0 and growth > 0)

Piotroski F-Score

7/9

Strong financial health

score
criteria

Earnings Quality

2.02

High quality: earnings backed by cash

Share Dilution

3.0%

Issuing new shares, diluting ownership

Institutional Holdings

No institutional filings reported for this company.

Governance

Executive Team

NameTitleAge
Mr. Anthony J. WoodFounder, Chairman, President & CEO59
Mr. Dan Jedda C.P.A.COO & CFO53
Mr. Mustafa OzgenPresident of Devices, Product & Technology57
Mr. Christopher T. Handman J.D.Senior VP & General Counsel52
Mr. Charlie CollierPresident of Roku Media47
Mr. Matthew C. BanksVP, Corporate Controller & Chief Accounting Officer47
Mr. Conrad GroddVice President of Investor Relations-
Ms. Kelli RafteryVice President of Global Communications52
Mr. Gilbert FuchsbergPresident of Subscriptions, Partnerships & Corporate Development62
Mr. Ilya AsnisSenior Vice President of Roku OS-

Audit Risk

5

Board Risk

9

Compensation Risk

10

Shareholder Rights Risk

10

Part 2 · The price and when to enter

This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.

Documents

  • Annual Report (10-K)

    A yearly overview of the business, its financial results, and the risks it faces.

    Filed on 2026-02-13

    View document
  • Quarterly Report (10-Q)

    A snapshot of financial performance for the most recent three-month period.

    Filed on 2026-08-06

    View document
  • Current Report (8-K)

    An announcement of a major event, such as a leadership change or big news.

    Filed on 2026-09-09

    View document

via SEC EDGAR

Income History

via SEC EDGAR

Latest News

Recent headlines for ROKU, sourced from Markets Gazette.

  • 6/18/2026NEUTRAL
    Deal Dispatch: Yum! Brands Sells Pizza Hut, Fox Corp. Buys Roku For $22 Billion, Salesforce Acquires Fin

    Fox Corporation has agreed to acquire Roku Inc. for approximately $22 billion, a move that could significantly reshape the connected TV landscape. This acquisition positions Fox to bolster its streaming capabilities and content distribution. While the deal is substantial, its immediate impact on Roku's stock price is subject to regulatory review and market reaction to the integration plan. Investors will be closely watching for details on how Fox intends to leverage Roku's platform and user base to drive future revenue growth and synergies.

  • 6/15/2026POSITIVE
    Fox to Buy Roku at $22 Billion Value in Streaming Video Push

    Fox Corp. has agreed to acquire Roku Inc. for approximately $22 billion, including debt, in a strategic move to bolster its presence in ad-supported streaming. This combination will integrate Fox's diverse content portfolio, including its free streaming service Tubi, with Roku's extensive platform boasting over 100 million subscribers. The merged entity is poised to become the third-largest player in the U.S. television market, spanning broadcast, cable, local, and streaming segments. This acquisition is expected to significantly enhance Fox's growth trajectory by expanding into high-growth digital media verticals, offering substantial value to shareholders.

  • 6/15/2026NEGATIVE
    This Roku Analyst Is No Longer Bullish; Here Are Top 2 Downgrades For Monday

    Roku Inc. has been downgraded by Wall Street analysts, signaling a shift in sentiment from bullish to neutral or bearish. While specific reasons for the downgrade were not detailed in the provided snippet, such actions typically stem from concerns over future growth prospects, competitive pressures, or macroeconomic headwinds impacting the advertising-dependent streaming platform. Investors should monitor Roku's upcoming earnings reports and strategic announcements for further clarity on the underlying issues driving this analyst reassessment.

  • 6/12/2026POSITIVE
    Roku Said in Sale Talks, Including for Possible Media Tie-Up

    Roku Inc. is reportedly in discussions regarding a potential sale of the company, with sources indicating that a media tie-up is among the possibilities being explored. This news suggests a significant strategic shift for the streaming platform, which could lead to a substantial valuation event for shareholders. While details remain scarce, the mere initiation of such talks often signals that a premium price is being considered, potentially offering an attractive exit for investors. The market will be closely watching for further developments and any confirmed offers.

  • 2/27/2026POSITIVE
    Roku quietly rolls out a major free upgrade for users

    Markets Gazette: Roku Rolls Out Silent Yet Significant Free Upgrade. Streaming giant Roku Inc. has quietly introduced a major free upgrade for its users, a strategic move poised to potentially reinvigorate its customer base. At a time when traditional advertising struggles for originality and premium subscriptions dominate the streaming landscape, Roku's initiative stands out. Offering added value at no extra cost is a shrewd tactic to enhance user satisfaction and potentially attract new subscribers, solidifying Roku's position in the highly competitive streaming market. This upgrade could translate into increased user retention and higher engagement, crucial factors for advertising revenues and the company's overall growth. Investors should closely monitor the impact of this development on Roku's future performance.

  • 2/26/2026POSITIVE
    Say Hello to the Growth Stock That's Winning the Streaming Wars

    Roku Inc. is emerging as an undisputed leader in the "streaming wars," demonstrating remarkable growth capabilities. Its strategy as a neutral platform, effectively connecting viewers and content providers, proves successful in a highly competitive market. This approach allows it to capitalize on the increasing demand for digital entertainment, distinguishing itself from competitors who often prioritize their own content. Investors should closely monitor Roku's performance, as its unique position makes it a potentially resilient and expanding asset in the global media landscape. Success in building an inclusive ecosystem could translate into further market share gains and strengthen its valuation as a "growth stock."

via Markets Gazette