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New: Introducing “Why Is It Moving?” - lightning-fast, AI-driven explanations of stock moves
Roku stock is beating the market this year, but it's still down more than 80% from its all-time high.
After returning to profitability this summer, Roku is ready to build on its success.
With consistent double-digit percentage growth in revenue and platform consumption, Roku is leading the way in the connected TV market.
Roku (NASDAQ: ROKU) stock is rallying this year. Shares of the connected TV pioneer that literally put out the first operating system for smart TVs are up 28% so far in 2025, comfortably beating the market.
It's fair to say that Roku has earned that uptick. The streaming services industry bellwether returned to profitability in the second quarter, which was earlier than analysts were expecting. That ended a run of more than three years in the red. Roku continues to post double-digit percentage revenue growth, and its trailing-12-month free cash flow is consistently in the hundreds of millions of dollars.
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Image source: Getty Images.
Roku is looking pretty good right now, but it's still a bargain by historical standards. Zoom out a few years, and you will see a stock that is still trading more than 80% below the all-time high it touched in 2021.
That doesn't seem right. The platform's popularity has never been stronger. People spent a record 35.4 billion hours streaming content through Roku's platform in the second quarter, a 17% increase over the prior-year period. Advertising dollars continue to migrate from old-fashioned linear television to streaming, even if near-term results can get bumpy when the economy stumbles. It also doesn't help year-over-year comparisons that in 2024, you had the cyclical spike in advertising that arrives every four years ahead of a presidential election. So the comparisons may prove challenging, but it's hard to bet against a newly profitable Roku.
As an investor, you want to take notice of ad tech companies that are on the right side of the momentum trends. With Roku trouncing analysts' quarterly profit expectations over the past year by 25% or better, you might want to consider doing your due diligence on the company ahead of its third-quarter results, which are set to come out on Oct. 30. Roku already knows how to engage its growing audience of viewers. Now, it's time for it to engage Wall Street with a sustainable recovery.
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Rick Munarriz has positions in Roku. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.
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