Roku Inc. ROKU shares have experienced significant volatility and a notable 12% year-to-date (YTD) decline, underperforming the broader Zacks Consumer Discretionary sector and the Zacks Broadcast Radio and Television industry.
ROKU shares have also lagged behind competitors like Amazon AMZN, Alphabet GOOGL and Apple AAPL during the same period. While Amazon declined 8.9%, Alphabet and Apple saw relatively smaller drops of 6.1% and 5.1%, respectively.
Roku’s sharp stock price decline can be attributed to investor concerns around its competitive positioning and near-term growth visibility. Large ecosystem players Amazon, Alphabet and Apple continue to strengthen their connected TV and advertising capabilities, leveraging scale, data and vertically integrated platforms. Also, Roku’s devices business remains a drag, with management projecting gross margins to stay in the negative mid-teens range in 2026, highlighting the lack of a clear path to profitability and limited contribution to overall growth.
Adding to these challenges, Roku’s distribution strategy is also facing obstacles, as Walmart is migrating its house TV brand to Vizio’s operating system, raising concerns about potential market share loss in a key retail channel.
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However, we believe the dip offers an attractive opportunity for investors to buy now, supported by Roku’s scalable platform structure, expanding monetization potential and long-term international growth runway.
Roku’s platform-driven model remains the key driver of its long-term growth, with Platform revenues now making up the largest share of its business. In 2025, Platform revenues increased 18% year over year to $4.145 billion, and the company expects this momentum to continue. For 2026, Roku projects Platform revenues to grow another 18% to around $4.89 billion, with first-quarter growth expected to exceed 21%. This growth is accompanied by strong profitability, with gross margins for 2026 expected to hold steady at 51%-52%, underscoring the scalability of Roku’s advertising and streaming distribution model.
A key strength of the platform is its large and growing user base, with more than 90 million streaming households globally. Roku’s position as the #1 TV streaming platform by hours viewed enhances its attractiveness to advertisers and strengthens pricing power. Management expects this base to surpass 100 million households in 2026, further expanding monetization potential.
Roku continues to deepen monetization through a diversified advertising ecosystem and expanding subscription offerings. Its open ad platform integrates with leading demand-side platforms such as Amazon DSP, The Trade Desk and Yahoo, while partnerships with measurement providers like Nielsen improve ad effectiveness and transparency. At the same time, its self-serve Roku Ads Manager is unlocking a significant opportunity for small- and medium-sized businesses — a segment representing hundreds of billions in ad spend.
Looking ahead, Roku’s platform is expected to benefit from AI-driven enhancements in content discovery, ad targeting and user engagement, which directly fuel monetization.
