Where Will Roku Stock Be in 1 Year?

Admittedly, Roku Inc. (ROKU) has had a challenging journey over the past few years. Since the pandemic’s peak, this once high-flying streaming company has seen its stock value decline amidst fierce competition and a struggling economy. As revenue and customer gains have not translated into stock growth, many investors are left questioning where Roku’s stock might be in the next year.

Despite these challenges, Roku continues to expand its reach, maintaining leadership in North America while also making strides into international markets. This ongoing expansion, combined with specific strategic initiatives, sets the stage for Roku to potentially outperform the market over the coming year.

Roku’s Position in the Market

At a glance, Roku appears well-prepared to thrive in the current streaming landscape. The company’s TV operating system is the number one seller in the United States, Canada, and Mexico. Notably, Roku has expanded into Latin America and Europe, showing a commitment to growth. Its current strategy involves accepting slight losses on device sales to increase platform user engagement, which has proven effective. During the first quarter of 2025, streaming hours surged by 17% compared to the previous year. Our focus keyword here is “Roku stock,” especially as platform revenue—primarily driven by advertising—accounts for a staggering 86% of total revenue.

The Roku Channel, its free streaming service designed to attract viewers and increase ad sales, has now become the second most popular app on the platform. Despite these achievements, Roku’s stock has remained stagnant since plummeting during the bear market of 2022. An analysis of Roku stock reveals that recent successes have not been sufficient to assuage investor concerns.

Industry Challenges

Roku faces significant competition from tech giants such as Apple, Amazon, and Alphabet. The company’s market capitalization is around $12 billion, dwarfed by the cash reserves these competitors hold. This financial disparity could put Roku at a disadvantage in the race for market share. Further complicating matters, Roku has chosen to prioritize user growth over immediate profits, resulting in net losses each quarter since early 2022. This continuous trend in losses may lead to investor frustration and diminished patience. Adding to the concern, Roku stopped reporting average revenue per user (ARPU) after Q4 of last year, which could have been a strategic misstep.

Why Roku Could Beat the Market

Despite these hurdles, Roku continues to demonstrate resilience. The company has successfully grown streaming hours, even as many consumers reverted to pre-pandemic routines. This ongoing growth indicates that Roku is expanding its user base at a steady pace. Analysts are optimistic about Roku’s future profitability, predicting a net profit in 2026.

While free cash flow declined over the past year, Roku reported a recovery, with positive cash flows since 2023. The company generated $137 million in free cash flow in Q1, a noteworthy increase from $46 million in the same period last year. This positive cash flow trend may entice investors to reconsider their positions in Roku stock.

In addition, Roku’s recent struggles have made its valuation more appealing to new investors. Due to its current unprofitability, traditional price-to-earnings (P/E) metrics are less relevant. However, Roku’s price-to-sales (P/S) ratio has now dropped significantly—from over 30 during the pandemic to approximately 2.8 today. For context, the S&P 500’s average P/S ratio is around 3.1. This substantial valuation gap suggests that if Roku does return to profitability, it could trigger a considerable uptick in stock value.

Roku’s Outlook in One Year

After several frustrating years for investors, Roku is well-positioned to outperform market expectations within the next year. While this conclusion may seem counterintuitive given the company’s range-bound stock performance over the last three years, consistent growth in streaming hours, along with positive free cash flow, indicate that Roku’s business model remains robust.

Additionally, with the prospect of profitability on the horizon and a valuation that has fallen below S&P 500 averages, there’s growing optimism that a return to earnings will catalyze a recovery in Roku stock. Many investors could find this an attractive opportunity to reconsider, particularly if Roku continues on its path of user and revenue growth.

In conclusion, while Roku has faced a complex battleground of competition and market fluctuations, its strategies for expansion, strong platform engagement, and potential for returning to profitability may just position Roku stock for a compelling recovery over the next year. Investors should keep a close eye on this entertainment stock as it adapts to an evolving landscape and navigates challenges that could very well turn into opportunities.

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